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Motor Trend
18 minutes ago
- Motor Trend
How the One Big Beautiful Bill Will Affect Car Buying and Ownership
On July 4, President Trump signed the 'One Big Beautiful Bill' Act into law. The budget reconciliation bill made big changes to federal spending, taxes, and regulation, some of which will have big effects on car owners, enthusiasts, and the automotive industry. We've read through the 879-page bill and outlined the parts that'll affect your next car purchase, the price of gas, and your commute. The "One Big Beautiful Bill" affects car buying by altering tax deductions on auto loans, ending EV tax credits, reducing CAFE penalties to zero, and cutting grants for clean vehicles. It also impacts gas and power prices by changing drilling and energy policies. This summary was generated by AI using content from this MotorTrend article Read Next Because this is a reconciliation bill, which modifies existing budget legislation rather than starting from scratch, there are limits to what can be included in the legislation. Everything in the bill has to be directly related to government spending and taxation, so some of the changes are creatively written in order to make the cut. (As always, please consult your tax professional before making financial decisions. The below is provided for information purposes only and is not tax or financial advice.) 'No' Tax on Car Loan Interest This one is confusing, and 'no' is in quotation marks because it's misleading. Car buyers looking to finance their next purchase may be able to write off some—but not all—of the interest charged on the loan each calendar year on their taxes. That's not the same as abolishing or suspending the tax altogether, as the claim implies. There are also a number of rules for qualifying which will cut off a lot of buyers. First and foremost, the vehicle you're buying has to be assembled in the U.S. That will be confusing for some buyers, because some of the bestselling vehicles in the U.S, such as the Toyota RAV4 and Chevrolet Silverado, are built in multiple plants, not all of them in the U.S. The IRS will know where your vehicle is made because you have to supply the VIN when claiming the tax deduction, and that number includes a digit that represents the country of origin. The tax deduction doesn't apply to leases, either, only purchases. It appears to apply to both new and used vehicle purchases, as the legislation makes no distinction. Vehicles with salvage titles and parts cars don't count, either. Similarly, it doesn't apply to anything with a gross vehicle weight rating over 14,000 pounds (which is the rating of a Ford F-350, as an example). Commercial vehicles qualify but only if they're for personal use, not business use. Business fleet purchases don't qualify, so be careful if you're planning to register your vehicle to your small business in order to take advantage of other tax incentives. If your purchase qualifies, there are still more rules. The tax deduction is capped at $10,000 per calendar year, so if you pay more than that in interest, the balance will still be taxed. If you make more than $100,000 per year as an individual or $200,000 per year as a joint filer (married or similar), the amount of interest you're able to deduct goes down by $200 for every $1,000 of income you earn over $100,000 (individual, or $200,000 combined). Do the math and it means no tax credit for anyone making over $150,000 individually or $250,000 combined. Finally, the tax credit is only available for a limited time. You can't start counting interest payments towards a deduction until January 1, 2026, so the rest of this year doesn't count. The tax credit will expire on December 31, 2029 unless Congress extends it. EV Tax Credits End September 30 The (up to) $7,500 federal tax credit for new and used EVs now expires on September 30 of this year. Previously, both tax credits were scheduled to expire on December 31, 2032. Likewise, the tax credit for commercial EVs expires the same day. State tax credits are not affected. On a related note, the federal tax credit for installing an EV charger or renewable fuel dispenser at your home or business will expire even sooner, on July 30 of this year. Tax credits have been a huge driver of EV sales to date, so the end of them could cause final vehicle sale prices to rise and sales to plummet. A large drop in sales could lead automakers to discontinue some or all of their EVs, reducing choice in the market. Lower cost EVs with smaller profit margins would be vulnerable, which could lead to only more expensive EVs on the market. Less Help With Bad Auto Loans Stopping predatory auto loans had been a major focus for the Consumer Financial Protection Bureau during the Biden administration, but enforcement is likely to drop off substantially after the passage of this bill. Funding for the bureau is cut by 54 percent, which will drastically reduce the number of investigations and actions it's able to execute. No Penalties for CAFE Violations Because this is a reconciliation bill, Congress could not make changes to vehicle emissions and fuel economy laws. Rather than replace or abolish the Corporate Average Fuel Economy program (CAFE), this bill keeps all the existing rules in place but reduces the penalties for breaking them to $0.00. This means automakers are free to ignore federal fuel economy regulations as the EPA cannot meaningfully enforce them. This could potentially affect consumers in multiple ways. If automakers stop following CAFE rules, fuel economy could go down and emissions could go up. Any savings on R&D could then be passed on to the consumer. This is unlikely, however. Automakers plan as much as a decade in advance, so vehicles for sale today were engineered years ago and the money already spent. Future iterations of Congress and future presidents could also reinstate the penalties in a few years, which would wipe out any savings and put automakers behind on R&D. Fuel economy regulations elsewhere in the world aren't changing, so there's little incentive for automakers to cut R&D spending regardless, meaning no reduction in pricing is likely. No More Money for Clean Commercial Vehicles Businesses and local governments around the country have taken advantage of federal grants to help offset the cost of replacing older heavy duty commercial vehicles with EVs. These grants were commonly used to replace old, diesel school busses with new, electric versions and also covered installation of chargers and training employees to work on those vehicles and chargers. Any grant money not already spent has been taken away. Similarly, grants for reducing diesel exhaust emissions in low income and disadvantaged areas have been cut, with all unspent money withdrawn. Funding has also been cut for an EPA program which studies the health and environmental effects of fuel additives. Reduction in Tax Credits for Commuters If your employer provides a transit passes, vanpool reimbursement, parking passes, or a bicycle commuting reimbursement, the amount you're able to deduct on your taxes is going down. Previously, you could deduct up to $175 per month each for your vanpool, transit pass, or parking pass. Now, you can only deduct up to $175 total per month for any combination of those services. The deduction for bicycle commuting has been eliminated entirely. No More Money or Credits For Home Solar and Battery Backups This is tangential to car buying and ownership, but if you were planning to take advantage of tax credits to install solar panels and battery backups in your home to offset the cost of charging an EV, you're out of luck. Any money not already spent on those grants and tax credits has been rescinded. Likewise, the business tax credit for building specifically energy efficient new homes has been cut, along with business tax credits for training contractors to install solar panels, batteries, and more efficient appliances. Gas and Power Prices Could Be Affected Portions of the bill addressing oil drilling and the Strategic Petroleum Reserve may have a small impact on gas prices in the future. Various provisions restart new oil and gas drilling leases both in the U.S. and offshore in its oceans, which would eventually add to the global oil supply and potentially push down prices. However, it will take years for any new leases to be acquired, explored, drilled, and turned into production wells, and oil companies are already sitting on a large number of unexplored leases. Because oil is a globally traded commodity, adding more supply doesn't necessarily change the price of a barrel of oil, nor the price of a gallon of gas. The bill also requires the government to abandon a plan introduced during Trump's first term to sell down part of the Strategic Petroleum Reserve. Instead, it requires the government to buy more oil it can store for future emergencies. Presidents like to draw on the Strategic Petroleum Reserve during times of high gas prices, but the quantities withdrawn are typically so small they have little to no impact on lowering the price at the pump. With regard to electricity generation, the bill paves the way to reopen old, closed power plants and cuts tax credits for wind and solar farms. Old power plants will now be able to reopen without any retrofitting of modern pollution controls, which could make them economically viable, although it depends on the individual plant. New wind and solar farms now have a shorter window to begin operations before the tax credits are cut off, and the lack of credits is expected to make new such farms economically unviable in the future. Fewer wind and solar farms means energy prices are less likely to go down or remain flat, while old power plants coming back online could partially offset their absence at the cost of greater air pollution in those communities. The bill also undoes several provisions of the Inflation Reduction Act, which provided loans and grants for electrical infrastructure improvements nationally, including transmission line improvements in particular, as well as integrating offshore wind farms into the power grid and improving electrical infrastructure on tribal land. Any reductions in electricity prices or increases in reliability these improvements may have provided are off the table. Similarly, by cutting the clean hydrogen production credit several years earlier than planned, the bill will likely slow or halt the adoption of clean sources of hydrogen and slow or stall the nascent hydrogen vehicle industry, both for private and commercial vehicles. Most hydrogen today is produced from gas and oil, which is both cheaper and dirtier than clean alternatives.
Yahoo
26 minutes ago
- Yahoo
Trump caught off guard by Pentagon's abrupt move to pause Ukraine weapons deliveries, AP sources say
WASHINGTON (AP) — President Donald Trump's decision to send more defensive weapons to Ukraine came after he privately expressed frustration with Pentagon officials for announcing a pause in some deliveries last week — a move that he felt wasn't properly coordinated with the White House, according to three people familiar with the matter. The Pentagon, which announced last week that it would hold back some air defense missiles, precision-guided artillery and other weapons pledged to Ukraine because of what U.S. officials said were concerns that American stockpiles were in short supply. Donald Trump said Monday that the U.S. will have to send more weapons to Ukraine, effectively reversing the move. Two of the people, who spoke on the condition of anonymity about the sensitive internal discussions, said there was some internal opposition among Pentagon brass to the pause — coordinated by Pentagon policy chief Elbridge Colby — before it was announced. One of the people described Trump as being caught 'flat footed' by the announcement. The White House did not respond to queries about whether Trump was surprised by the Pentagon pause. Pentagon press secretary Kingsley Wilson denied that Defense Secretary Pete Hegseth had acted without consulting the president. 'It is the job of the Secretary of Defense to make military recommendations to the commander-in-chief. Secretary Hegseth provided a framework for the President to evaluate military aid shipments and assess existing stockpiles. This effort was coordinated across government. The Department will continue to give the President robust options regarding military aid to Ukraine, consistent with his goal of bringing this tragic war to an end and putting America first,' Wilson said in a statement to The Associated Press. The pause in critical weapons deliveries had come at a difficult moment for Ukraine, which has faced increasing — and more complex — air barrages from Russia during the more than three-year-old war. Trump acknowledged that in announcing the reversal on Monday night, saying, "They have to be able to defend themselves. They're getting hit very hard now." Asked by a reporter Tuesday who approved the pause, Trump bristled at the question while he was gathered with his Cabinet. 'I don't know. Why don't you tell me?" Trump's change in tone on Putin The president also laid into Russian President Vladimir Putin, suggesting he was unnecessarily prolonging the war that Trump has said he's determined to quickly conclude. Trump has struggled to find a resolution, with talks between the sides stalled. The Republican leader has sounded increasingly exasperated with Putin in recent days. The two spoke by phone last week. 'We get a lot of bull---- thrown at us by Putin, if you want to know the truth," Trump said during Tuesday's Cabinet meeting. "He's very nice all the time, but it turns out to be meaningless.' He has threatened, but held off on, imposing new sanctions against Russia's oil industry to try to prod Putin into peace talks. Sen. Lindsey Graham, R-S.C., said last week that Trump has given him the go-ahead to push forward with a bill he's co-sponsoring that calls, in part, for a 500% tariff on goods imported from countries that continue to buy Russian oil. The move would have huge ramifications for China and India, two economic behemoths that buy Russian oil. Trump said Tuesday that he's 'looking at it very strongly.' Pentagon says it's going to resume shipments to Ukraine The weapons pause announced last week impacted shipments of Patriot missiles, precision-guided GMLRS, Hellfire missiles and Howitzer rounds and more, taking not only Ukrainian officials and other allies by surprise but also U.S. lawmakers and other parts of the Trump administration, including the State Department. The Pentagon said late Monday that at Trump's direction, it would resume weapons shipments to Ukraine 'to ensure the Ukrainians can defend themselves while we work to secure a lasting peace and ensure the killing stops.' Still, spokesman Sean Parnell added that its review for Trump to evaluate military shipments worldwide continues as part of 'America First' defense priorities. It's also unclear which weaponry would now be sent, though Trump said that the U.S. will primarily be assisting Ukraine with defensive weapons. Counting the weapons On Tuesday, each of the services and the combatant commands — the multiservice organizations that spearhead U.S. military operations around the world — were still sending up information on their stockpiles of specific munitions to Pentagon leadership, a U.S. official said. 'They are literally still doing the math,' the official said. The information was being presented on a stoplight chart — where munitions were either in a red, yellow or green status, similar to slides that had been created the week before, the official said. That earlier study had concluded that some munitions were OK to keep sending to Ukraine — but others were reaching concerning levels. Getting a full visibility on the numbers of actual munitions on hand takes time, the official said, because while Patriot missiles, for example, initially belong to the Army, once they are requested and sent to a combatant command, such as U.S. Central Command, the service loses visibility on those numbers in inventory. The vast majority of the munitions and weapons the U.S. has shipped to Ukraine have been pulled from the Army, which has monitored levels closely in recent years, particularly for high-demand items like 155mm artillery shells and Patriot missiles for air defenses. It's been harder for the Army to ramp up production on those items than had been planned: It was trying to hit a goal of producing 100,000 155mm shells a month by the end of 2025 but won't meet that goal now until 2026, Army spokesman Steve Warren said. Ramping up Patriot missile production also has been challenging, Warren said. Sen. Mitch McConnell, R-Ky., said in a statement Tuesday that he was glad Trump was resuming deliveries to Ukraine. 'This time, the President will need to reject calls from the isolationists and restrainers within his Administration to limit these deliveries to defensive weapons," McConnell said. 'And he should disregard those at DoD who invoke munitions shortages to block aid while refusing to invest seriously in expanding munitions production.' ___ Associated Press writers Lisa Mascaro and Matthew Lee contributed to this report.
Bloomberg
27 minutes ago
- Bloomberg
Trump Pressures South Korea to Pay More for Defense
President Donald Trump said South Korea should pay more for its own defense, upping pressure on the Asian ally after sending a letter to extend time for negotiations before 25% across-the-board levies are set to kick in for its shipments to the US. 'South Korea is making a lot of money and they are very good, they are very good but you know, they should be paying for their own military,' Trump said during a Cabinet meeting on Tuesday.
