American-made vehicles could be incentivized under a new bill that recently passed the House
- The House of Representatives passed a bill that includes an auto loan interest deduction.
- It would span a four year period and allow for a limit of up to $10,000 annually.
- An assortment of vehicles would qualify as long as final assembly was done in the U.S.
Donald Trump floated the possibility of an auto loan interest deduction when he was running for office and it’s now getting closer to reality. A provision was included in the ‘One Big Beautiful Bill Act’ that was narrowly passed by the House of Representatives.
In the build up to the vote, the White House billed the deduction as incentivizing U.S. production. As they stated, “It rewards companies that build their products in America with lower taxes – and allows Americans who buy an American-made vehicle to fully deduct their auto loan interest.”
Also: Trump’s ‘Big Beautiful Bill’ Passes With Higher EV And Hybrid Taxes
However, the devil is in the details and they’re buried deep in section 110104. It calls for the incentive to apply to vehicles between December 31, 2024 and January 1, 2029.
It would apply to passenger vehicles, including cars, vans, trucks, and SUVs, as well as motorcycles, all-terrain vehicles, and RVs. However, in order to qualify, these models would need to have had “final assembly” completed in the United States.
Continuing down the rabbit hole, people may not be able to “fully deduct” the value of their loan as claimed by the White House. Instead, there would be an interest limit of $10,000 per year.
Wealthy consumers would also be ‘penalized’ for their success. According to the bill, qualified passenger vehicle loan interest would be “reduced 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).”
Those aren’t the only stipulations as the bill excludes leases, commercial vehicles, and vehicles with salvage titles. Fleet purchases and cars bought with personal cash loans would also be excluded.
All that being said, the bill now heads to the Senate where it faces an uphill battle over concerns about debt and deep cuts to programs that millions of Americans depend on. Politico reports the bill “can’t pass without major changes,” so it remains to be seen if the auto interest deduction will survive.
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