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Author proposes deduction for interest on personal vehicle loans; committee questions fiscal cost
Summary
AB 490 would allow a deduction for interest paid on qualified personal vehicle loans; the California Tax Reform Association opposed reintroducing consumer interest deductibility and the Franchise Tax Board estimated a large fiscal cost; the committee referred the bill to the suspense file.
Assemblymember Kevin Tangipa presented AB 490 to allow a personal income tax deduction for interest paid on qualified personal vehicle loans, saying the measure would ease the burden of rising auto costs and help Californians who depend on cars for work and daily needs.
Opponents included the California Tax Reform Association, which argued consumer interest deductibility was eliminated decades ago and the change would disproportionately benefit higher-income taxpayers. In questioning, committee members pointed to an FTB estimate included in the analysis that the deduction could cost over $1 billion when fully in effect and asked how the bill would protect low- and middle-income households from being overshadowed by benefits to luxury purchasers.
Tangipa said he was open to amendments, including caps and income eligibility, to target the benefit to those who need it most.
Formal action: the committee referred AB 490 to the suspense file for further fiscal review.
