I 

111TH CONGRESS 

1ST SESSION H. R. 1768 

To amend the Internal Revenue Code of 1986 to provide tax incentives 

for replacing an automobile with a more fuel-efficient automobile. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 26, 2009 

Mr. PAUL introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

tax incentives for replacing an automobile with a more 

fuel-efficient automobile. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Energy Efficient and 

5 Environmentally Friendly Automobile Tax Credit Act of 

6 2009’’. 

7 SEC. 2. CREDIT FOR REPLACING AN AUTOMOBILE WITH A 

8 MORE FUEL-EFFICIENT AUTOMOBILE. 

9 (a) IN GENERAL.—Subpart B of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by inserting after section 30D the fol2 lowing new section: 

3 ‘‘SEC. 30E. CREDIT FOR REPLACING AN AUTOMOBILE WITH 

4 A MORE FUEL-EFFICIENT AUTOMOBILE. 

5 ‘‘(a) IN GENERAL.—In the case of an eligible pur6 chase by an eligible taxpayer of a passenger automobile, 

7 there shall be allowed as a credit against the tax imposed 

8 by this chapter an amount equal to the lesser of— 

9 ‘‘(1) the cost of the passenger automobile, or 

10 ‘‘(2) $2,000. 

11 ‘‘(b) ELIGIBLE PURCHASE.—For purposes of this 

12 section— 

13 ‘‘(1) IN GENERAL.—The term ‘eligible pur14 chase’ means any purchase of a passenger auto15 mobile if— 

16 ‘‘(A) the taxpayer sells another passenger 

17 automobile within a reasonable period sur18 rounding such purchase, and 

19 ‘‘(B) the average fuel economy of the pur20 chased automobile is at least 20 percent better 

21 than the average fuel economy of the sold auto22 mobile. 

23 ‘‘(2) PASSENGER AUTOMOBILE.—The term 

24 ‘passenger automobile’ has the meaning given such 

25 term in regulations prescribed by the Administrator 


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1 of the Environmental Protection Agency for pur2 poses of the administration of title II of the Clean 

3 Air Act (42 U.S.C. 7521 et seq.). Such term in4 cludes a light truck (within the meaning of such reg5 ulations). 

6 ‘‘(3) FUEL ECONOMY.—Average fuel economy 

7 shall be determined as provided in section 

8 30B(h)(2). 

9 ‘‘(c) ELIGIBLE TAXPAYER.—For purposes of this sec10 tion— 

11 ‘‘(1) IN GENERAL.—The term ‘eligible taxpayer’ 

12 means— 

13 ‘‘(A) any individual, and 

14 ‘‘(B) any qualified business. 

15 ‘‘(2) QUALIFIED BUSINESS.—The term ‘quali16 fied business’ means any sole proprietorship, part17 nership, or corporation if— 

18 ‘‘(A) at least 40 percent of its total gross 

19 income for the taxable year is derived from the 

20 active conduct of transporting persons or prop21 erty for hire, and 

22 ‘‘(B) in the case of a partnership or cor23 poration, all of the equity interests in which are 

24 held by 1 individual. 


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1 ‘‘(3) AGGREGATION RULES.—All persons treat2 ed as a single employer under subsection (a) or (b) 

3 of section 52, or subsection (m) or (o) of section 

4 414, shall be treated as 1 person for purposes of 

5 paragraph (2). 

6 ‘‘(d) APPLICATION WITH OTHER CREDITS.— 

7 ‘‘(1) BUSINESS CREDIT TREATED AS PART OF

8 GENERAL BUSINESS CREDIT.—So much of the credit 

9 which would be allowed under subsection (a) for any 

10 taxable year (determined without regard to this sub11 section) that is attributable to property of a char12 acter subject to an allowance for depreciation shall 

13 be treated as a credit listed in section 38(b) for such 

14 taxable year (and not allowed under subsection (a)). 

15 ‘‘(2) PERSONAL CREDIT.—The credit allowed 

16 under subsection (a) (after the application of para17 graph (1)) for any taxable year shall not exceed the 

18 excess (if any) of— 

19 ‘‘(A) the regular tax liability (as defined in 

20 section 26(b)) reduced by the sum of the credits 

21 allowable under subpart A and sections 27, 30, 

22 30B, and 30C, over 

23 ‘‘(B) the tentative minimum tax for the 

24 taxable year. 

25 ‘‘(e) SPECIAL RULES.— 


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1 ‘‘(1) EXCEPTION FOR BUSINESS VEHICLES.— 

2 Except in the case of a qualified business, subsection 

3 (a) shall apply only to passenger automobiles sub4 stantially all of the use of which is for personal, non5 business purposes. 

6 ‘‘(2) LIMITATION ON VEHICLES BEING RE7 PLACED.—Except in the case of a qualified business, 

8 subsection (b)(1)(A) shall apply only to passenger 

9 vehicles which were substantially and regularly used 

10 by the taxpayer for personal, nonbusiness purposes. 

11 ‘‘(3) BASIS REDUCTION.—The basis of any pas12 senger automobile for which credit is allowed under 

13 subsection (a) shall be reduced by the amount of 

14 such credit.’’. 

15 (b) TECHNICAL AMENDMENTS.— 

16 (1) Section 38(b) of such Code is amended by 

17 striking ‘‘plus’’ at the end of paragraph (34), by 

18 striking the period at the end of paragraph (35) and 

19 inserting ‘‘, plus’’, and by adding at the end the fol20 lowing new paragraph: 

21 ‘‘(36) the portion of the credit under section 

22 30E (relating to credit for replacing an automobile 

23 with a more fuel-efficient automobile) to which sec24 tion 30E(d)(1) applies.’’. 


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1 (2) Section 55(c)(3) of such Code is amended 

2 by inserting ‘‘30E(d)(2),’’ after ‘‘30C(d)(2),’’. 

3 (3) The table of sections for subpart B of part 

4 IV of subchapter A of chapter 1 of such Code is 

5 amended by inserting after the item relating to sec6 tion 30C the following new item: 

‘‘Sec. 30E. Credit for replacing an automobile with a more fuel-efficient automobile.’’. 

7 SEC. 3. DEDUCTION FOR STATE AND LOCAL TAXES IM8 POSED ON PURCHASE OF MORE FUEL-EFFI9 CIENT AUTOMOBILES. 

10 Subsection (a) of section 164 of the Internal Revenue 

11 Code of 1986 (relating to deduction for taxes) is amended 

12 by adding at the end the following new paragraph: 

13 ‘‘(6) State and local taxes imposed on the pur14 chase of any passenger automobile (as defined in 

15 section 30E(b)(2)) for which credit is allowed to the 

16 taxpayer under section 30E.’’. 

17 SEC. 4. DEDUCTION FOR INTEREST ON LOANS USED TO 

18 PURCHASE MORE FUEL-EFFICIENT AUTO19 MOBILES. 

20 Paragraph (2) of section 163(h) of the Internal Rev21 enue Code of 1986 (defining personal interest) is amended 

22 by striking ‘‘and’’ at the end of subparagraph (E), by 

23 striking the period at the end of subparagraph (F) and 


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1 inserting ‘‘, and’’, and by adding at the end the following 

2 new subparagraph: 

3 ‘‘(G) any interest paid or accrued on in4 debtedness incurred to purchase a passenger 

5 automobile (as defined in section 30E(b)(2)) for 

6 which credit is allowed to the taxpayer under 

7 section 30E.’’. 

8 SEC. 5. EFFECTIVE DATE. 

9 The amendment made by this Act shall apply vehicles 

10 purchased after the date of the enactment of this Act in 

11 taxable years ending after such date. 

Æ 


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