A new tax bill signed into law by President Trump has introduced significant changes that will impact car buyers, owners, and the automotive industry. The “One Big Beautiful Bill” Act alters tax deductions on auto loans, ends EV tax credits, reduces CAFE penalties to zero, and cuts grants for clean vehicles.
The bill’s provision on car loan interest allows buyers to write off some, but not all, of the interest charged on their loans each year on their taxes. However, this benefit is limited by several rules, including requirements that the vehicle be assembled in the US and a cap at $10,000 per calendar year. Additionally, individuals making over $150,000 individually or $250,000 combined will not receive any tax credit.
The EV tax credits for new and used EVs have expired on September 30th, while commercial EV credits also expire on the same day. State tax credits remain unaffected. The end of these credits may lead to increased final vehicle sale prices and plummeting sales, potentially reducing choice in the market.
The bill reduces funding for the Consumer Financial Protection Bureau by 54%, which will likely decrease enforcement on predatory auto loans. It also eliminates penalties for CAFE violations, allowing automakers to ignore federal fuel economy regulations with reduced consequences. This change may lead to decreased savings for consumers and potentially increased emissions.
Grants for clean commercial vehicles have been eliminated or cut off, affecting businesses and local governments that rely on these incentives. The bill also reduces tax credits for wind and solar farms, which could impact the cost of electricity generation and the adoption of renewable energy sources.
Overall, this new tax bill will likely have a significant impact on the automotive industry and car buyers, particularly in regards to auto loan interest, EV credits, and fuel economy regulations.
Source: https://www.motortrend.com/news/how-the-one-big-beautiful-bill-will-affect-car-buying-and-ownership