HR-3450 : Still Just a Bill

H.R. 3450, a bill introduced in the House of Representatives on May 15, 2025, aims to amend the Internal Revenue Code of 1986 by introducing special rules that allow taxpayers to deduct interest paid on qualified passenger vehicle loans. Key provisions of the bill include:

• Tax Deduction for Vehicle Loan Interest: For taxable years 2024 through 2028, the bill would allow taxpayers to deduct interest paid on loans for purchasing applicable passenger vehicles for personal use.
• Qualified Passenger Vehicle Loan: Defines "qualified passenger vehicle loan interest" as interest paid on debt incurred after December 31, 2024, to buy an applicable passenger vehicle, secured by a first lien, for personal use.
• Exceptions: The deduction does not apply to loans for fleet sales, personal cash loans secured by a vehicle, commercial vehicle loans, lease financing, vehicles with salvage titles, or vehicles for scrap.
• Limitations: The deduction is capped at $10,000 of interest per year. It is also reduced for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint returns).
• Applicable Passenger Vehicle: Defines an "applicable passenger vehicle" as cars, minivans, vans, sport utility vehicles, pickup trucks, motorcycles, all-terrain vehicles, trailers, campers, or recreational vehicles manufactured primarily for use on public roads. It excludes vehicles not assembled in the United States.
• Taxpayer Itemization: The deduction is allowed whether or not the taxpayer itemizes deductions.
• Reporting Requirements: Requires businesses that receive $600 or more in interest from an individual on a specified passenger vehicle loan to report this information to the IRS, including the borrower's name, the amount of interest received, the outstanding principal, the loan origination date, and the vehicle's details.
• Effective Date: The amendments apply to indebtedness incurred after December 31, 2024.