Latest budget makes interest on American made cars fully deductible.

[GON]

Sure - an even playing works for me. How does that play out globally?

Pretty easy to thump China with these rules. What if the US is the offender in the deal?

If trading reciprocally with say Europe - countries that are cleaner than we are probably wouldn't buy our products.

Global trade is a fallacy unless the playing field is even. Which it is not. Although I love some hard cheeses from Italy, that is not a product in the world I need to enjoy a certain standard of living that can't be made in the U.S. But importing from other nations that don't have to meet the regulatory manufacturing standards of the U.S. is a sure-fire way to collapse the U.S. standard of living- and eventually our nation.

You always need to ask-- why does every single U.S. based high tech billionaire own an estate in New Zealand? A very deep question but when a nation imports more than it exports, the nation financially collapses, every single time without exception. What "western" nation is protected (isolated) from war on a MACRO basis, is self-sufficient food, water, and energy wise, and the government won't take away the estate, New Zealand is the only nation in the world to meet that criteria.

 

[tbm5690]

Any place any body wants to live is expensive. Expensive houses generally correlate to the job markets. It's like this-many of us can't relate to the current situation-and your post proves it. Don't mean that in a disrespectful manner. The truth is most of issue on his board are in a far different place than the generations coming up-the difference is that I realize it.
Talk about challenges facing them......

I get that many desirable places are expensive, and jobs generally pay more in those expensive cities but I feel that there are plenty of areas where housing is cheaper and pay is less, however comparatively higher in comparison to cost of housing, if that makes sense. I'm a millennial, so my peers are the ones we are talking about here that are struggling to own a home. In my opinion, more often than not, it is a lack of discipline in spending and saving and not an income problem. My wife and I stayed in a cheap one bedroom apartment to pack away thousands every month for a down payment for over 3 years...no new cars with loans, no expensive vacations, just good old fashioned budgeting and living on less. Here are two examples that are personal to me:

Friend #1: 30 years old, single, makes about $90k per year. Spent $70k on a truck recently, and rents a penthouse apartment. Not willing to give up the truck and/or buy a starter home because it "isn't nice enough". The truck only allows him to be approved for about $250k on a mortgage.

Friend #2: 37 years old, married, no kids, combined household income likely about $150k. Continues to rent a townhome despite easily having enough income to purchase. Choses to spend money on toys instead. Started house shopping a year or so ago and didn't pull the trigger.

This is my experience...

At the end of the day, people whine and complain but are not willing to adjust lifestyle for a few years and don't have the discipline needed to make it happen.

 

[miden851]

its a drop in the bucket; very few guys will qualify over the standard deduction

yet a 179 tax deduction for businesses has been around for awhile now that allows one to deduction the purchasing price for a vehicle upfront

 

[Pablo]

Doubtful I will ever be able to afford to.

Personally I think tax on labor is fundamentally wrong. It’s a like - kind profitless exchange and hence should not be taxed at all. Our founders agree.

They also thought big central government was a bad idea yet here we are.

No kidding.

A young lady and I started our careers together at Rockwell International. Hired the same day. We were friends for many years. Like both of our first decent (high) paying jobs (yes I had a couple OK jobs before)

Long story short we were talking about income taxes, progressive taxation of income. I was a bit more accepting in those days - she posed the question: "Why in the USA is success penalized?"

 

[CKN]

No kidding.

A young lady and I started our careers together at Rockwell International. Hired the same day. We were friends for many years. Like both of our first decent (high) paying jobs (yes I had a couple OK jobs before)

Long story short we were talking about income taxes, progressive taxation of income. I was a bit more accepting in those days - she posed the question: "Why in the USA is success penalized?"

I have traveled to 38 countries. Educating myself on some of those-the U.S. is definitely not alone in this regard. Spain is one that comes to mind.

 

[UncleDave]

its a drop in the bucket; very few guys will qualify over the standard deduction

yet a 179 tax deduction for businesses has been around for awhile now that allows one to deduction the purchasing price for a vehicle upfront

Not quite the whole vehicle but a significant amount.

This is basically what half tons are the number one vehicle in the US - taxpayer largess.

 

[Nick1994]

So you deduct the interest on the loan for American made cars. Uh, ok.

Let’s say you don’t take the standard deduction.

Median household income is $80,610. Married filing jointly they pay $5,705 in federal income taxes. The average vehicle purchase price is $49k. Add some tax and doc fees, $54k loan. At 7% interest that’s $12,722 over the life of a 6 year loan. Or $2,120 per year.

So if the car is American, they add that to their tally to deduct, they’d save $254 a year in income taxes. If they even had enough deductive expenses to itemize their taxes in the first place (somewhere around $30k)

 

[ripcord]

It turns out you don't need to be able to itemize to take the auto loan deduction.

https://www.kiplinger.com/taxes/new-gop-car-loan-tax-deduction

Proponents also stress that, as mentioned, the deduction is structured as an above-the-line benefit, so taxpayers can claim it even if they claim the standard deduction on their federal returns.

Some other details: It's not a permanent thing and will expire in several years. The amount you can deduct reduces if you make over 100k if filing as a single person or 200k if filing jointly. You can't get the benefit at all if you make over 150k if filing as a single and 250k if filing jointly.

This makes it much more applicable to the average person.

 

[SwampSurvivor]

So you deduct the interest on the loan for American made cars. Uh, ok.

Let’s say you don’t take the standard deduction.

Median household income is $80,610. Married filing jointly they pay $5,705 in federal income taxes. The average vehicle purchase price is $49k. Add some tax and doc fees, $54k loan. At 7% interest that’s $12,722 over the life of a 6 year loan. Or $2,120 per year.

So if the car is American, they add that to their tally to deduct, they’d save $254 a year in income taxes. If they even had enough deductive expenses to itemize their taxes in the first place (somewhere around $30k)

There's a lot of uninformed people who will now go out and finance American made vehicles for long terms.
The banks ad the auto makers win on this one.

 

[Pablo]

There's a lot of uninformed people who will now go out and finance American made vehicles for long terms.
The banks ad the auto makers win on this one.

You think they wouldn't finance anyway?

What are car loan rates anyway? Decent win for people who do finance (I don't), car makers and the banks always win.

 

[alarmguy]

You think they wouldn't finance anyway?

What are car loan rates anyway? Decent win for people who do finance (I don't), car makers and the banks always win.

Not always, with stellar credit its not unusual to be able to get 0% specials
Yeah, it's possible you may have been able to get the amount of interest you might pay off the sticker price by not taking 0% but not as much today as in the past.

We dont do car loans but we did in Nov 2024 because 0% we financed the whole thing. The money we would have used in our savings account stays there collecting 4% which equals (I did the math one time but forgot) over $2000 in interest we collect on that money.
(I know we are an unusual example, they throw out these specials to get people in the door, most don't qualify)

 

[Pablo]

Not always, with stellar credit its not unusual to be able to get 0% specials
Yeah, it's possible you may have been able to get the amount of interest you might pay off the sticker price by not taking 0% but not as much today as it did in the past.

We dont do car loans but we did in Nov 2024 because 0% we financed the whole thing. The money we would have used in our savings account stays there collecting 4% which equals (I did the math one time but forgot) over $2000 in interest we collect on that money.

I always assumed those 0% loans where financed by the auto maker.

 

[alarmguy]

I always assumed those 0% loans where financed by the auto maker.

Oops! Oh yes, I guess I missed something. Loan is with GMAC
We did 36 months 0%
It really went against my nature but I sat there, thinking I must be stupid not to take it as bottom line is we were lucky enough to be paying sticker and not over that this dealer adds boatloads of stuff onto.

(also made things simple or I would have had to bring a check back to the dealer and close the deal after the weekend, though they said we could take the car with us that day considering our credit rating)

 

[tbm5690]

Oops! Oh yes, I guess I missed something. Loan is with GMAC
We did 36 months 0%
It really went against my nature but I sat there, thinking I must be stupid not to take it as bottom line is we were lucky enough to be paying sticker and not over that this dealer adds boatloads of stuff onto.

(also made things simple or I would have had to bring a check back to the dealer and close the deal after the weekend, though they said we could take the car with us that day considering our credit rating)

36 months is a reasonable term. I've never had a car loan but if/when I do 36 or less would be the goal. I somewhat understand 48 or 60 months for some people, but IMO anything over 60 is bonkers and shouldn't exist.

 

[alarmguy]

36 months is a reasonable term. I've never had a car loan but if/when I do 36 or less would be the goal. I somewhat understand 48 or 60 months for some people, but IMO anything over 60 is bonkers and shouldn't exist.

Yeah, 36 and if a stretch used to be 48 months.
Now we are up to 7 and 8 years! Insanity is what I say.

 

[johnmyster]

Self employed tax is one of the double gougers inherent in the code.

This is why SS and Medicare tax are such a government scheme.

The dumb american only thinks they cost 6.2%/1.45% of their income for their entire lives and in the end, they get something out of it. Actually, it costs twice that and what you get out of it isn't nearly worth 12.4%/2.9%. The government just craftfully hides half of it and the american mentality is that as long as someone else (the employer) pays it, it's free, right?

If the masses realized that those programs really constituted 15.3% on top of all the other taxes, there would be revolution.

 

[Pablo]

This is why SS and Medicare tax are such a government scheme.

The dumb american only thinks they cost 6.2%/1.45% of their income for their entire lives and in the end, they get something out of it. Actually, it costs twice that and what you get out of it isn't nearly worth 12.4%/2.9%. The government just craftfully hides half of it and the american mentality is that as long as someone else (the employer) pays it, it's free, right?

If the masses realized that those programs really constituted 15.3% on top of all the other taxes, there would be revolution.

I doubt that. It's 2025. Nada.

 

[BMWTurboDzl]

I just read that the latest budget bill will make interest on new cars manufactured in the United States fully deductible (up to $10k per year). Combine this with the CAFE Standards fine removal and the EV subsidy elimination and how do you see this changing the new car market?

This Motor Trend article discusses all three changes.

https://www.motortrend.com/news/how-the-one-big-beautiful-bill-will-affect-car-buying-and-ownership

It's really silly because it just increases the supply of buyers. Automobile prices will not drop, and are more likely to increase. Exhibit A: Cost of housing.

 

[Pablo]

It's really silly because it just increases the supply of buyers. Automobile prices will not drop, and are more likely to increase. Exhibit A: Cost of housing.

Scale TBD.

I think 80%+ people when they determine via their gut, they "need" a new car, nothin gunna get in their way if you follow. This may kick a few more in that pool, but qty TBD.

 

[johnmyster]

I doubt that. It's 2025. Nada.

True. Lots of people might make a tweet about it.