New Bill Could Save American Taxpayers Buying American Cars Hundreds Of Dollars On Their Taxes

At a time when buying a brand-new Ford F-150 Lightning and/or a GMC Sierra EV has hit a major stumbling block, a new bill recently introduced by the United States’ House of Representatives could at least provide financial relief on auto loan interest to American car buyers. Under the bill, consumers in the U.S. would be able to deduct up to $10,000 in interest paid on their auto loans on their taxes, providing the vehicle was manufactured in the United States.

This is the latest move in the Trump administration’s push to promote American-made products, the most controversial so far being the 25 percent tariffs (though these have been adjusted again) slapped on all non-U.S.-made vehicles and auto parts being imported into the country.

New Bill Hopes To Push US Sales And Manufacturing

At a time when interest rates and car prices in particular are spiking, it is hoped that the new bill will stimulate demand for American-made cars and trucks, and in the process, kickstart a surge of manufacturing jobs in the United States. The thinking is that manufacturers, buoyed by (potentially) increased sales aided by relief such as this, will be motivated to relocate more of their assembly back to the U.S., and/or start investing in new plants.

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Supporters of the bill believe that such a move could be a particular shot in the arm for American brands like Chevrolet, Ford, and GMC – as well as parent companies that oversee U.S. marques, like Stellantis – which already operate multiple plants across the United States.

The bill would also offer tax relief on interest paid for other vehicles like RVs, trailers, ATVs, and motorcycles. If, again, they are built in the United States.

How The Bill Could Work, And Why It Could Backfire

As reported by Automotive News, which used data provided by Edmunds, the average new vehicle loan last month was $41,444, financed over 69.1 months at an interest rate of 7.1 percent. Consequently, consumers would be expected to pay just shy of $2,800 in interest over their first year of this deal, and a little over $8,200 across a four-year period. Under this new bill, and if these still-sub-$10,000 interest payments are claimed, savings for taxpayers could range from just shy of $275 for those in the 10 percent federal bracket (between $0 and $11,600 taxable income) to upwards of $600 for those on the 22 percent bracket (between $11,601 and $47,150).

Support for the bill, however, has been far from unanimous (it passed by just one vote, 215 to 214). The Congressional Budget Office, for example, believes that these deductions could lead to up to $57.8 billion in lost revenue between now and the 2029 fiscal year, with some representatives referring to the bill as a “debt bomb ticking.”

Source: Automotive News