SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Drivers Accelerated Interest 
Deductibility Act of 2010'' or the ``Drivers AID Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The economic health and well-being of the United States 
        depends on a strong and resurgent automotive industry. Until 
        2008, automotive sales historically accounted for approximately 
        20 percent of all retail spending in the United States, and 
        provided the income and financial security for millions of 
        Americans.
            (2) From June 2006 through May 2008, the seasonally 
        adjusted annual rate of automotive sales ranged from a high of 
        approximately 17,500,000 units in June 2006 to a low of 
        14,200,000 units in May 2008, substantially above the 
        13,000,000 unit seasonally adjusted annual rate generally 
        regarded to be the indicator of a robust automotive industry.
            (3) Beginning in June 2008 and continuing through the 
        present, the seasonally adjusted annual rate of automotive 
        sales has averaged less than 10,000,000 units and has exceeded 
        that number in only three months and has not in any matched or 
        exceeded the 13,000,000 unit seasonally adjusted annual rate 
        threshold.
            (4) The annual contributions of the automotive new vehicle 
        dealers industry to the national economy are substantial. In 
        2008, the average sales revenue for the approximately 20,000 
        new automobile dealers in the United States was $28,800,000 and 
        the total sales of all new-vehicle dealerships in the United 
        States was $576,000,000,000 which constituted 14.6 percent of 
        total retail sales in the United States.
            (5) In 2008, the 1,057,500 persons employed in new-vehicle 
        dealerships in the United States, an average of 53 employees 
        per dealership, earned on average $48,963 per year, generating 
        a national payroll of more than $52,000,000,000 and $2,660,000 
        per dealership and millions more in tax revenue for State and 
        local governments.
            (6) Because a well capitalized, financially sound dealer 
        network is essential to the success of every automobile 
        manufacturer, especially a manufacturer facing economic 
        challenges, preserving the viability of the new-vehicle dealer 
        industry further the national economic interest of the United 
        States.
            (7) Because sales of new vehicles is highly dependent on 
        consumer confidence and the existence of incentives to motivate 
        consumers to purchase a new-vehicle, a reduction in the cost of 
        capital needed to finance the purchase of a new vehicle over a 
        period of years will have a positive effect on the viability of 
        the new-vehicle dealer industry, which in turn will strengthen 
        the automotive manufacturing industry and the national economy.
            (8) Payment of nonmortgage interest payments, such as 
        automobile loan debt, was deductible for Federal income tax 
        purposes for 73 years, from the inception of the Internal 
        Revenue Code in 1913 until Congress ended the deduction in 1986 
        when the Tax Reform Act of 1986 was passed.

SEC. 3. DEDUCTION FOR INTEREST ON INDEBTEDNESS INCURRED TO ACQUIRE A 
              PASSENGER CAR OR LIGHT TRUCK.

    (a) In General.--Paragraph (2) of section 163(h) of the Internal 
Revenue Code of 1986 is amended by striking ``and'' at the end of 
subparagraph (E), by striking the period at the end of subparagraph (F) 
and inserting ``, and'', and by adding at the end the following new 
subparagraph:
                    ``(G) in the case of the acquisition of a qualified 
                vehicle, any qualified vehicle interest if, for the 
                calendar quarter preceding the date on which such 
                vehicle is acquired, the average national unemployment 
                rate for such quarter is not less than 7 percent.''.
    (b) Qualified Vehicle Interest.--Paragraph (5) of section 163(h) of 
the Internal Revenue Code of 1986 is amended to read as follows:
            ``(5) Qualified vehicle interest.--For purposes of 
        paragraph (2)(G) and this paragraph--
                    ``(A) In general.--The term `qualified vehicle 
                interest' means any interest which--
                            ``(i) is properly chargeable on 
                        indebtedness incurred in acquiring a qualified 
                        vehicle, and
                            ``(ii) is properly allocable to the 36-
                        month period described in subparagraph (B)(ii).
                    ``(B) Limitations.--
                            ``(i) Dollar limitation.--The amount of 
                        interest taken into account under this 
                        paragraph (after the application of 
                        subparagraph (A)(ii)) with respect to a 
                        qualified vehicle shall not exceed $5,000.
                            ``(ii) Period limitation.--Only interest on 
                        such indebtedness properly allocable to the 36-
                        month period beginning on the date such 
                        indebtedness is incurred may be taken into 
                        account under this paragraph.
                    ``(C) Qualified vehicle.--
                            ``(i) In general.--The term `qualified 
                        vehicle' means a motor vehicle--
                                    ``(I) the original use of which 
                                commences with the taxpayer,
                                    ``(II) which is acquired for use by 
                                the taxpayer and not for resale,
                                    ``(III) with respect to which no 
                                payment is made under section 1302 of 
                                the Consumer Assistance to Recycle and 
                                Save Act of 2009,
                                    ``(IV) which is made by a 
                                manufacturer,
                                    ``(V) which is treated as a motor 
                                vehicle for purposes of title II of the 
                                Clean Air Act,
                                    ``(VI) which has a gross vehicle 
                                weight rating of 6,000 pounds or less, 
                                and
                                    ``(VII) which is a passenger 
                                automobile or light truck.
                            ``(ii) Motor vehicle.--The term `motor 
                        vehicle' means any vehicle which is 
                        manufactured primarily for use on public 
                        streets, roads, and highways (not including a 
                        vehicle operated exclusively on a rail or 
                        rails) and which has at least 4 wheels.
                            ``(iii) Other terms.--The terms 
                        `automobile', `passenger automobile', `light 
                        truck', and `manufacturer' have the meanings 
                        given such terms in regulations prescribed by 
                        the Administrator of the Environmental 
                        Protection Agency for purposes of the 
                        administration of title II of the Clean Air Act 
                        (42 U.S.C. 7521 et seq.).
                    ``(D) Average national unemployment rate.--The 
                average national unemployment rate for a calendar 
                quarter means the national unemployment rate means the 
                average of the monthly national unemployment rates for 
                months in the calendar quarter, as reported by the 
                Bureau of Labor Statistics, Department of Labor.''.
    (c) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code is amended by inserting 
before the last sentence the following new paragraph:
            ``(22) Qualified vehicle interest.--The deduction allowed 
        by reason of section 163(h)(5).''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to vehicles acquired on or after January 1, 2008.
Drivers Accelerated Interest Deductibility Act of 2010 or the Drivers AID Act - Amends the Internal Revenue Code to allow a deduction from gross income of up to $5,000 for interest paid for the purchase of certain new automobiles or light trucks during periods when the national unemployment rate is 7% or greater.
To amend the Internal Revenue Code of 1986 to allow a deduction for interest paid on indebtedness incurred in connection with the purchase of a new automobile or light truck.