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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Energy Efficient and 
Environmentally Friendly Automobile Tax Credit Act of 
2009’’. 
SEC. 2. CREDIT FOR REPLACING AN AUTOMOBILE WITH A 
MORE FUEL-EFFICIENT AUTOMOBILE. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
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1986 is amended by inserting after section 30D the fol-
lowing new section: 
‘‘SEC. 30E. CREDIT FOR REPLACING AN AUTOMOBILE WITH 
A MORE FUEL-EFFICIENT AUTOMOBILE. 
‘‘(a) IN GENERAL.—In the case of an eligible pur-
chase by an eligible taxpayer of a passenger automobile, 
there shall be allowed as a credit against the tax imposed 
by this chapter an amount equal to the lesser of— 
‘‘(1) the cost of the passenger automobile, or 
‘‘(2) $2,000. 
‘‘(b) ELIGIBLE PURCHASE.—For purposes of this 
section— 
‘‘(1) IN
GENERAL.—The term ‘eligible pur-
chase’ means any purchase of a passenger auto-
mobile if— 
‘‘(A) the taxpayer sells another passenger 
automobile within a reasonable period sur-
rounding such purchase, and 
‘‘(B) the average fuel economy of the pur-
chased automobile is at least 20 percent better 
than the average fuel economy of the sold auto-
mobile. 
‘‘(2) PASSENGER
AUTOMOBILE.—The term 
‘passenger automobile’ has the meaning given such 
term in regulations prescribed by the Administrator 
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of the Environmental Protection Agency for pur-
poses of the administration of title II of the Clean 
Air Act (42 U.S.C. 7521 et seq.). Such term in-
cludes a light truck (within the meaning of such reg-
ulations). 
‘‘(3) FUEL ECONOMY.—Average fuel economy 
shall 
be 
determined 
as 
provided 
in 
section 
30B(h)(2). 
‘‘(c) ELIGIBLE TAXPAYER.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘eligible taxpayer’ 
means— 
‘‘(A) any individual, and 
‘‘(B) any qualified business. 
‘‘(2) QUALIFIED BUSINESS.—The term ‘quali-
fied business’ means any sole proprietorship, part-
nership, or corporation if— 
‘‘(A) at least 40 percent of its total gross 
income for the taxable year is derived from the 
active conduct of transporting persons or prop-
erty for hire, and 
‘‘(B) in the case of a partnership or cor-
poration, all of the equity interests in which are 
held by 1 individual. 
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‘‘(3) AGGREGATION RULES.—All persons treat-
ed as a single employer under subsection (a) or (b) 
of section 52, or subsection (m) or (o) of section 
414, shall be treated as 1 person for purposes of 
paragraph (2). 
‘‘(d) APPLICATION WITH OTHER CREDITS.— 
‘‘(1) BUSINESS CREDIT TREATED AS PART OF 
GENERAL BUSINESS CREDIT.—So much of the credit 
which would be allowed under subsection (a) for any 
taxable year (determined without regard to this sub-
section) that is attributable to property of a char-
acter subject to an allowance for depreciation shall 
be treated as a credit listed in section 38(b) for such 
taxable year (and not allowed under subsection (a)). 
‘‘(2) PERSONAL
CREDIT.—The credit allowed 
under subsection (a) (after the application of para-
graph (1)) for any taxable year shall not exceed the 
excess (if any) of— 
‘‘(A) the regular tax liability (as defined in 
section 26(b)) reduced by the sum of the credits 
allowable under subpart A and sections 27, 30, 
30B, and 30C, over 
‘‘(B) the tentative minimum tax for the 
taxable year. 
‘‘(e) SPECIAL RULES.— 
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(2) Section 55(c)(3) of such Code is amended 
by inserting ‘‘30E(d)(2),’’ after ‘‘30C(d)(2),’’. 
(3) The table of sections for subpart B of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 30C the following new item: 
‘‘Sec. 30E. Credit for replacing an automobile with a more fuel-efficient auto-
mobile.’’. 
SEC. 3. DEDUCTION FOR STATE AND LOCAL TAXES IM-
POSED ON PURCHASE OF MORE FUEL-EFFI-
CIENT AUTOMOBILES. 
Subsection (a) of section 164 of the Internal Revenue 
Code of 1986 (relating to deduction for taxes) is amended 
by adding at the end the following new paragraph: 
‘‘(6) State and local taxes imposed on the pur-
chase of any passenger automobile (as defined in 
section 30E(b)(2)) for which credit is allowed to the 
taxpayer under section 30E.’’. 
SEC. 4. DEDUCTION FOR INTEREST ON LOANS USED TO 
PURCHASE 
MORE 
FUEL-EFFICIENT 
AUTO-
MOBILES. 
Paragraph (2) of section 163(h) of the Internal Rev-
enue Code of 1986 (defining personal interest) is amended 
by striking ‘‘and’’ at the end of subparagraph (E), by 
striking the period at the end of subparagraph (F) and 
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inserting ‘‘, and’’, and by adding at the end the following 
new subparagraph: 
‘‘(G) any interest paid or accrued on in-
debtedness incurred to purchase a passenger 
automobile (as defined in section 30E(b)(2)) for 
which credit is allowed to the taxpayer under 
section 30E.’’. 
SEC. 5. EFFECTIVE DATE. 
The amendment made by this Act shall apply vehicles 
purchased after the date of the enactment of this Act in 
taxable years ending after such date. 
Æ 
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