I 
119TH CONGRESS 
1ST SESSION H. R. 3450 
To amend the Internal Revenue Code of 1986 to provide for special rules 
allowing taxpayers to deduct qualified passenger vehicle loan interest 
paid or accrued during the taxable year on certain indebtedness, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 15, 2025 
Mr. KELLY of Pennsylvania (for himself and Mr. HUIZENGA) 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 
for special rules allowing taxpayers to deduct qualified 
passenger vehicle loan interest paid or accrued during 
the taxable year on certain indebtedness, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. NO TAX ON CAR LOAN INTEREST. 
(a) IN GENERAL.—Section 163(h) of the Internal 
Revenue Code of 1986 is amended by redesignating para-
graph (4) as paragraph (5) and by inserting after para-
graph (3) the following new paragraph: 
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‘‘(4) SPECIAL
RULES
FOR
TAXABLE
YEARS 
2024 THROUGH 2028 RELATING TO QUALIFIED PAS-
SENGER VEHICLE LOAN INTEREST.— 
‘‘(A) IN GENERAL.—In the case of taxable 
years beginning after December 31, 2024, and 
before January 1, 2029, for purposes of this 
subsection the term ‘personal interest’ shall not 
include qualified passenger vehicle loan interest. 
‘‘(B) QUALIFIED
PASSENGER
VEHICLE 
LOAN INTEREST DEFINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, the term ‘qualified pas-
senger vehicle loan interest’ means any in-
terest which is paid or accrued during the 
taxable year on indebtedness incurred by 
the taxpayer after December 31, 2024, for 
the purchase of, and that is secured by a 
first lien on, an applicable passenger vehi-
cle for personal use. 
‘‘(ii) EXCEPTIONS.—Such term shall 
not include any amount paid or incurred 
on any of the following: 
‘‘(I) A loan to finance fleet sales. 
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‘‘(II) A personal cash loan se-
cured by a vehicle previously pur-
chased by the taxpayer. 
‘‘(III) A loan incurred for the 
purchase of a commercial vehicle that 
is not used for personal purposes. 
‘‘(IV) Any lease financing. 
‘‘(V) A loan to finance the pur-
chase of a vehicle with a salvage title. 
‘‘(VI) A loan to finance the pur-
chase of a vehicle intended to be used 
for scrap or parts. 
‘‘(C) LIMITATIONS.— 
‘‘(i) DOLLAR LIMIT.—The amount of 
interest taken into account by a taxpayer 
under subparagraph (B) for any taxable 
year shall not exceed $10,000. 
‘‘(ii) LIMITATION
BASED
ON
MODI-
FIED ADJUSTED GROSS INCOME.— 
‘‘(I) IN GENERAL.—The amount 
which is otherwise allowable as a de-
duction under subsection (a) as quali-
fied passenger vehicle loan interest 
(determined without regard to this 
clause and after the application of 
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clause (i)) shall be reduced (but not 
below zero) by $200 for each $1,000 
(or portion thereof) by which the 
modified adjusted gross income of the 
taxpayer for the taxable year exceeds 
$100,000 ($200,000 in the case of a 
joint return). 
‘‘(II) 
MODIFIED
ADJUSTED 
GROSS INCOME.—For purposes of this 
clause, the term ‘modified adjusted 
gross income’ means the adjusted 
gross income of the taxpayer for the 
taxable year increased by any amount 
excluded from gross income under sec-
tion 911, 931, or 933. 
‘‘(D) APPLICABLE PASSENGER VEHICLE.— 
The term ‘applicable passenger vehicle’ means 
any vehicle— 
‘‘(i)(I) which is manufactured pri-
marily for use on public streets, roads, and 
highways, 
‘‘(II) which has at least 2 wheels, and 
‘‘(III) which is a car, minivan, van, 
sport utility vehicle, pickup truck, or mo-
torcycle, 
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‘‘(ii) which is an all-terrain vehicle 
(designed for use on land), or 
‘‘(iii) any trailer, camper, or vehicle 
(designed for use on land) which— 
‘‘(I) is designed to provide tem-
porary living quarters for recreational, 
camping, or seasonal use, and 
‘‘(II) is a motor vehicle or is de-
signed to be towed by, or affixed to, 
a motor vehicle. 
Such term shall not include any vehicle the 
final assembly of which did not occur within the 
United States. 
‘‘(E) OTHER
DEFINITIONS
AND
SPECIAL 
RULES.—For purposes of this paragraph— 
‘‘(i) 
ALL-TERRAIN
VEHICLE.—The 
term ‘all-terrain vehicle’ means any motor-
ized vehicle which has 3 or 4 wheels, a seat 
designed to be straddled by the operator, 
and handlebars for steering control. 
‘‘(ii) FINAL
ASSEMBLY.—For pur-
poses of subparagraph (D), the term ‘final 
assembly’ means the process by which a 
manufacturer produces a vehicle at, or 
through the use of, a plant, factory, or 
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other place from which the vehicle is deliv-
ered to a dealer or importer with all com-
ponent parts necessary for the mechanical 
operation of the vehicle included with the 
vehicle, whether or not the component 
parts are permanently installed in or on 
the vehicle. 
‘‘(iii) 
TREATMENT
OF
REFI-
NANCING.—Indebtedness described in sub-
paragraph (B) shall include indebtedness 
that results from refinancing any indebted-
ness described in such subparagraph, and 
that is secured by a first lien on the appli-
cable passenger vehicle with respect to 
which the refinanced indebtedness was in-
curred, but only to the extent the amount 
of such resulting indebtedness does not ex-
ceed the amount of such refinanced indebt-
edness. 
‘‘(iv) RELATED
PARTIES.—Indebted-
ness described in subparagraph (B) shall 
not include any indebtedness owed to a 
person who is related (within the meaning 
of section 267(b) or 707(b)(1)) to the tax-
payer.’’. 
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(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES.—Section 62(a) of such Code is amended 
by inserting after paragraph (21) the following new para-
graph: 
‘‘(22) QUALIFIED PASSENGER VEHICLE LOAN 
INTEREST.—So much of the deduction allowed by 
section 163(a) as is attributable to the exception 
under section 163(h)(4)(A).’’. 
(c) REPORTING.—Subpart B of part III of sub-
chapter A of chapter 61 of such Code is amended by add-
ing at the end the following new section: 
‘‘SEC. 6050AA. RETURNS RELATING TO APPLICABLE PAS-
SENGER VEHICLE LOAN INTEREST RECEIVED 
IN TRADE OR BUSINESS FROM INDIVIDUALS. 
‘‘(a) IN GENERAL.—Any person— 
‘‘(1) who is engaged in a trade or business, and 
‘‘(2) who, in the course of such trade or busi-
ness, receives from any individual interest aggre-
gating $600 or more for any calendar year on a 
specified passenger vehicle loan, 
shall make the return described in subsection (b) with re-
spect to each individual from whom such interest was re-
ceived at such time as the Secretary may provide. 
‘‘(b) FORM AND MANNER OF RETURNS.—A return 
is described in this subsection if such return— 
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‘‘(1) is in such form as the Secretary may pre-
scribe, and 
‘‘(2) contains— 
‘‘(A) the name and address of the indi-
vidual from whom the interest described in sub-
section (a)(2) was received, 
‘‘(B) the amount of such interest received 
for the calendar year, 
‘‘(C) the amount of outstanding principal 
on the specified passenger vehicle loan as of the 
beginning of such calendar year, 
‘‘(D) the date of the origination of such 
loan, 
‘‘(E) the year, make, and model of the ap-
plicable passenger vehicle which secures such 
loan (or such other description of such vehicle 
as the Secretary may prescribe), and 
‘‘(F) such other information as the Sec-
retary may prescribe. 
‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under 
subsection (a) shall furnish to each individual whose name 
is required to be set forth in such return a written state-
ment showing— 
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‘‘(1) the name, address, and phone number of 
the information contact of the person required to 
make such return, and 
‘‘(2) the information described in subpara-
graphs (B), (C), (D), and (E) of subsection (b)(2) 
with respect to such individual (and such informa-
tion as is described in subsection (b)(2)(F) with re-
spect to such individual as the Secretary may pro-
vide for purpoeses of this subsection). 
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the 
year following the calendar year for which the return 
under subsection (a) was required to be made. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) IN GENERAL.—Terms used in this section 
which are also used in paragraph (4) of section 
163(h) shall have the same meaning as when used 
in such paragraph. 
‘‘(2) SPECIFIED PASSENGER VEHICLE LOAN.— 
The term ‘specified passenger vehicle loan’ means 
the indebtedness described in section 163(h)(4)(B) 
with respect to any applicable passenger vehicle. 
‘‘(e) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as may be necessary or ap-
propriate to carry out the purposes of this section, includ-
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ing regulations or other guidance to prevent the duplicate 
reporting of information under this section.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 56(e)(1)(B) of such Code is amend-
ed by striking ‘‘section 163(h)(4)’’ and inserting 
‘‘section 163(h)(5)’’. 
(2) The table of sections for subpart B of part 
III of subchapter A of chapter 61 of such Code is 
amended by adding at the end the following new 
item: 
‘‘Sec. 6050AA. Returns relating to applicable passenger vehicle loan interest re-
ceived in trade or business from individuals.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to indebtedness incurred after De-
cember 31, 2024. 
Æ 
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