In this ninth installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), I discuss provisions of the Act that may permit individual taxpayers to deduct the interest incurred with respect to their automobile loan.[1] While the concept appears straightforward, its application is replete with intricate rules.
Background
In accordance with Code Section 163(h)(1), subject to certain exceptions, “[i]n the case of a taxpayer other than a corporation, no deduction shall be allowed under this chapter for personal interest paid or accrued during the taxable year.”
Section 70203 of the Act temporarily amends Code Section 163(h) and provides that, for purposes of Code Section 163(h), personal interest does not include “qualified passenger vehicle loan interest.”
The Act
To qualify for the new deduction on vehicle loan interest, several requirements must be satisfied.