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139 STAT. 176 PUBLIC LAW 119–21—JULY 4, 2025 accounting of amounts designated as qualified overtime compensa- tion by any reasonable method specified by the Secretary. SEC. 70203. NO TAX ON CAR LOAN INTEREST. (a) IN GENERAL.—Section 163(h) is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph: ‘‘(4) SPECIAL RULES FOR TAXABLE YEARS 2025 THROUGH 2028 RELATING TO QUALIFIED PASSENGER VEHICLE LOAN INTEREST.— ‘‘(A) IN GENERAL.—In the case of taxable years begin- ning after December 31, 2024, and before January 1, 2029, for purposes of this subsection the term ‘personal interest’ shall not include qualified passenger vehicle loan interest. ‘‘(B) QUALIFIED PASSENGER VEHICLE LOAN INTEREST DEFINED.— ‘‘(i) IN GENERAL.—For purposes of this paragraph, the term ‘qualified passenger vehicle loan interest’ means any interest which is paid or accrued during the taxable year on indebtedness incurred by the tax- payer after December 31, 2024, for the purchase of, and that is secured by a first lien on, an applicable passenger vehicle for personal use. ‘‘(ii) EXCEPTIONS.—Such term shall not include any amount paid or incurred on any of the following: ‘‘(I) A loan to finance fleet sales. ‘‘(II) A loan incurred for the purchase of a commercial vehicle that is not used for personal purposes. ‘‘(III) Any lease financing. ‘‘(IV) A loan to finance the purchase of a vehicle with a salvage title. ‘‘(V) A loan to finance the purchase of a vehicle intended to be used for scrap or parts. ‘‘(iii) VIN REQUIREMENT.—Interest shall not be treated as qualified passenger vehicle loan interest under this paragraph unless the taxpayer includes the vehicle identification number of the applicable pas- senger vehicle described in clause (i) on the return of tax for the taxable year. ‘‘(C) LIMITATIONS.— ‘‘(i) DOLLAR LIMIT.—The amount of interest taken into account by a taxpayer under subparagraph (B) for any taxable year shall not exceed $10,000. ‘‘(ii) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME.— ‘‘(I) IN GENERAL.—The amount which is other- wise allowable as a deduction under subsection (a) as qualified passenger vehicle loan interest (determined without regard to this clause and after the application of clause (i)) shall be reduced (but not below zero) by $200 for each $1,000 (or portion thereof) by which the modified adjusted gross income of the taxpayer for the taxable year exceeds $100,000 ($200,000 in the case of a joint return). ‘‘(II) MODIFIED ADJUSTED GROSS INCOME.—For purposes of this clause, the term ‘modified adjusted gross income’ means the adjusted gross income Definitions.