H.R. 3450

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3450 Introduced in House (IH)]

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119th CONGRESS
1st Session
H. R. 3450

To amend the Internal Revenue Code of 1986 to provide for special rules 
allowing taxpayers to deduct qualified passenger vehicle loan interest 
paid or accrued during the taxable year on certain indebtedness, and 
for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

May 15, 2025

Mr. Kelly of Pennsylvania (for himself and Mr. Huizenga) introduced the 
following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to provide for special rules 
allowing taxpayers to deduct qualified passenger vehicle loan interest 
paid or accrued during the taxable year on certain indebtedness, and 
for other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. NO TAX ON CAR LOAN INTEREST.

(a) In General.--Section 163(h) of the Internal Revenue Code of 
1986 is amended by redesignating paragraph (4) as paragraph (5) and by 
inserting after paragraph (3) the following new paragraph:
``(4) Special rules for taxable years 2024 through 2028 
relating to qualified passenger vehicle loan interest.--
``(A) In general.--In the case of taxable years 
beginning after December 31, 2024, and before January 
1, 2029, for purposes of this subsection the term 
`personal interest' shall not include qualified 
passenger vehicle loan interest.
``(B) Qualified passenger vehicle loan interest 
defined.--
``(i) In general.--For purposes of this 
paragraph, the term `qualified passenger 
vehicle loan interest' means any interest which 
is paid or accrued during the taxable year on 
indebtedness incurred by the taxpayer after 
December 31, 2024, for the purchase of, and 
that is secured by a first lien on, an 
applicable passenger vehicle for personal use.
``(ii) Exceptions.--Such term shall not 
include any amount paid or incurred on any of 
the following:
``(I) A loan to finance fleet 
sales.
``(II) A personal cash loan secured 
by a vehicle previously purchased by 
the taxpayer.
``(III) A loan incurred for the 
purchase of a commercial vehicle that 
is not used for personal purposes.
``(IV) Any lease financing.
``(V) A loan to finance the 
purchase of a vehicle with a salvage 
title.
``(VI) A loan to finance the 
purchase of a vehicle intended to be 
used for scrap or parts.
``(C) Limitations.--
``(i) Dollar limit.--The amount of interest 
taken into account by a taxpayer under 
subparagraph (B) for any taxable year shall not 
exceed $10,000.
``(ii) Limitation based on modified 
adjusted gross income.--
``(I) In general.--The amount which 
is otherwise allowable as a deduction 
under subsection (a) as qualified 
passenger vehicle loan interest 
(determined without regard to this 
clause and after the application of 
clause (i)) shall be reduced (but not 
below zero) by $200 for each $1,000 (or 
portion thereof) by which the modified 
adjusted gross income of the taxpayer 
for the taxable year exceeds $100,000 
($200,000 in the case of a joint 
return).
``(II) Modified adjusted gross 
income.--For purposes of this clause, 
the term `modified adjusted gross 
income' means the adjusted gross income 
of the taxpayer for the taxable year 
increased by any amount excluded from 
gross income under section 911, 931, or 
933.
``(D) Applicable passenger vehicle.--The term 
`applicable passenger vehicle' means any vehicle--
``(i)(I) which is manufactured primarily 
for use on public streets, roads, and highways,
``(II) which has at least 2 wheels, and
``(III) which is a car, minivan, van, sport 
utility vehicle, pickup truck, or motorcycle,
``(ii) which is an all-terrain vehicle 
(designed for use on land), or
``(iii) any trailer, camper, or vehicle 
(designed for use on land) which--
``(I) is designed to provide 
temporary living quarters for 
recreational, camping, or seasonal use, 
and
``(II) is a motor vehicle or is 
designed to be towed by, or affixed to, 
a motor vehicle.
Such term shall not include any vehicle the final 
assembly of which did not occur within the United 
States.
``(E) Other definitions and special rules.--For 
purposes of this paragraph--
``(i) All-terrain vehicle.--The term `all-
terrain vehicle' means any motorized vehicle 
which has 3 or 4 wheels, a seat designed to be 
straddled by the operator, and handlebars for 
steering control.
``(ii) Final assembly.--For purposes of 
subparagraph (D), the term `final assembly' 
means the process by which a manufacturer 
produces a vehicle at, or through the use of, a 
plant, factory, or other place from which the 
vehicle is delivered to a dealer or importer 
with all component parts necessary for the 
mechanical operation of the vehicle included 
with the vehicle, whether or not the component 
parts are permanently installed in or on the 
vehicle.
``(iii) Treatment of refinancing.--
Indebtedness described in subparagraph (B) 
shall include indebtedness that results from 
refinancing any indebtedness described in such 
subparagraph, and that is secured by a first 
lien on the applicable passenger vehicle with 
respect to which the refinanced indebtedness 
was incurred, but only to the extent the amount 
of such resulting indebtedness does not exceed 
the amount of such refinanced indebtedness.
``(iv) Related parties.--Indebtedness 
described in subparagraph (B) shall not include 
any indebtedness owed to a person who is 
related (within the meaning of section 267(b) 
or 707(b)(1)) to the taxpayer.''.
(b) Deduction Allowed Whether or Not Taxpayer Itemizes.--Section 
62(a) of such Code is amended by inserting after paragraph (21) the 
following new paragraph:
``(22) Qualified passenger vehicle loan interest.--So much 
of the deduction allowed by section 163(a) as is attributable 
to the exception under section 163(h)(4)(A).''.
(c) Reporting.--Subpart B of part III of subchapter A of chapter 61 
of such Code is amended by adding at the end the following new section:

``SEC. 6050AA. RETURNS RELATING TO APPLICABLE PASSENGER VEHICLE LOAN 
INTEREST RECEIVED IN TRADE OR BUSINESS FROM INDIVIDUALS.

``(a) In General.--Any person--
``(1) who is engaged in a trade or business, and
``(2) who, in the course of such trade or business, 
receives from any individual interest aggregating $600 or more 
for any calendar year on a specified passenger vehicle loan,
shall make the return described in subsection (b) with respect to each 
individual from whom such interest was received at such time as the 
Secretary may provide.
``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
``(1) is in such form as the Secretary may prescribe, and
``(2) contains--
``(A) the name and address of the individual from 
whom the interest described in subsection (a)(2) was 
received,
``(B) the amount of such interest received for the 
calendar year,
``(C) the amount of outstanding principal on the 
specified passenger vehicle loan as of the beginning of 
such calendar year,
``(D) the date of the origination of such loan,
``(E) the year, make, and model of the applicable 
passenger vehicle which secures such loan (or such 
other description of such vehicle as the Secretary may 
prescribe), and
``(F) such other information as the Secretary may 
prescribe.
``(c) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required to be set forth in such return a written statement showing--
``(1) the name, address, and phone number of the 
information contact of the person required to make such return, 
and
``(2) the information described in subparagraphs (B), (C), 
(D), and (E) of subsection (b)(2) with respect to such 
individual (and such information as is described in subsection 
(b)(2)(F) with respect to such individual as the Secretary may 
provide for purpoeses of this subsection).
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) was required to be made.
``(d) Definitions.--For purposes of this section--
``(1) In general.--Terms used in this section which are 
also used in paragraph (4) of section 163(h) shall have the 
same meaning as when used in such paragraph.
``(2) Specified passenger vehicle loan.--The term 
`specified passenger vehicle loan' means the indebtedness 
described in section 163(h)(4)(B) with respect to any 
applicable passenger vehicle.
``(e) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance to 
prevent the duplicate reporting of information under this section.''.
(d) Conforming Amendments.--
(1) Section 56(e)(1)(B) of such Code is amended by striking 
``section 163(h)(4)'' and inserting ``section 163(h)(5)''.
(2) The table of sections for subpart B of part III of 
subchapter A of chapter 61 of such Code is amended by adding at 
the end the following new item:

``Sec. 6050AA. Returns relating to applicable passenger vehicle loan 
interest received in trade or business from 
individuals.''.
(e) Effective Date.--The amendments made by this section shall 
apply to indebtedness incurred after December 31, 2024.
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