Bill > AB490

This bill proposes a new tax deduction for California taxpayers that allows individuals to deduct interest paid on one qualifying motor vehicle loan from their adjusted gross income for tax years between January 1, 2026, and January 1, 2031. A "qualified motor vehicle loan" is defined as a loan obtained for a personal use vehicle, and the deduction is intended to help Californians manage the significant costs of vehicle ownership, where average monthly interest rates range between 6.84% and 12.01% with an average loan term of 68 months. To ensure accountability, the bill requires the Franchise Tax Board to submit annual reports to the Legislature detailing the number of taxpayers claiming the deduction and the average dollar value of deductions, with performance indicators focusing on the number of taxpayers receiving the deduction and the total deduction amount. The legislation is designed to be temporary, with the provision set to be repealed on December 1, 2031, and it goes into immediate effect as a tax levy. By allowing this deduction, the bill aims to provide financial relief to California residents by reducing their taxable income based on car loan interest payments.

Budget and Finance

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260AB490