(a) In general

Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section:

224. Deduction for motor vehicle interest

(a) Allowance of deduction

In the case of an individual, there shall be allowed as a deduction an amount equal to the interest paid by the taxpayer during the taxable year on any qualified motor vehicle interest.

(b) Maximum deduction

The amount allowed as a deduction under subsection (a) shall not exceed $2,500.

(c) Denial of double benefit

No deduction shall be allowed under this section for any interest with respect to which a deduction is allowable under any other provision of this chapter.

(d) Qualified motor vehicle interest

For purposes of this section, the term qualified motor vehicle interest means any indebtedness—

(1)

incurred on or after January 1, 2025,

(2)

incurred in acquiring a qualified motor vehicle, and

(3)

secured by such motor vehicle.

(e) Qualified motor vehicle

For purposes of this section, the term ‘qualified motor vehicle’ means—

(1)

any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels,

(2)

which has a gross vehicle weight rating of less than 14,000 pounds,

(3)

which is made by a manufacturer (within the meaning given the term in section 102 of the National Traffic and Motor Vehicle Safety Act (49 U.S.C. 30102)), and

(4)

the final assembly of which occurs within the United States.

(f) Final assembly

For purposes of subsection (d), the term ‘final assembly’ means the process by which a manufacturer produces a motor vehicle at, or through the use of, a plant, factory, or other place from which the motor vehicle is delivered to a dealer with all component parts necessary for the mechanical operation of the motor vehicle included with the motor vehicle, whether or not the component parts are permanently installed in or on the motor vehicle.

(b) Deduction allowed whether or not individual itemizes other deductions

Section 62(a) of such Code is amended by inserting after paragraph (21) the following new paragraph:

(22) Motor vehicle interest

The deduction allowed by section 224.

(c) Clerical amendment

The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by redesignating the item relating to section 224 as an item relating to section 225 and by inserting after the item relating to section 223 the following new item:

(d) Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2025.