USA CAR Act

The USA CAR Act would create a new tax deduction for interest paid on loans used to buy certain automobiles. Specifically, individuals could claim an above-the-line deduction (i.e., a deduction that reduces adjusted gross income) for the portion of interest paid on indebtedness incurred after enactment that is used to acquire a “qualified automobile,” with the loan secured by the automobile. A “qualified automobile” is an automobile whose final assembly occurs in the United States, as defined by the Automobile Information Disclosure Act. The deduction would be in addition to other deductions and would apply to interest on new debt (incurred after enactment). The bill sets up the definition of qualified automobile interest and narrowly ties eligibility to US-assembled vehicles. In short, if enacted, the bill would lower the after-tax cost of buying certain US-assembled cars by allowing taxpayers to deduct the interest paid on the car loan from their gross income, starting with loans incurred after the law’s enactment.