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AB 490 would allow deduction for interest on personal vehicle loans; tax reform group warns it would favor higher‑income taxpayers
Summary
Assemblymember Tangipa proposed AB 490 to allow a state deduction for interest paid on qualified personal vehicle loans; the California Tax Reform Association opposed reinstating consumer interest deductibility and warned of disproportionate benefits for higher‑income taxpayers. The measure was referred to the committee suspense file.
Assemblymember Tangipa presented AB 490, a proposal to allow an income tax deduction for interest paid on a qualified personal vehicle loan. The author framed the proposal as relief for Californians for whom a personal vehicle is essential for work and daily life, especially where public transit is not a viable option.
Supporters argued the measure would ease rising costs of vehicle ownership. Opposition testimony from the California Tax Reform Association warned that deducting consumer interest historically was eliminated and that reinstatement would disproportionately assist higher‑income taxpayers while delivering limited benefits to low‑ and middle‑income families. The FTB analysis (summarized by staff during questioning) indicated the deduction could cost over $1 billion when fully in effect; members asked the author about caps and targeted eligibility criteria. The author said he was open to amendments to limit eligibility and focus benefits on lower‑income taxpayers. The committee referred AB 490 to the suspense file for further work and fiscal review.
