CAR Act
- Bill Number
- H.R. 7582
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-02-13: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-03-11T23:02:00Z
AI-Generated Summary
Purpose
The Collector Automobile Relief Act (H.R. 7582), also known as the CAR Act, aims to provide tax relief for owners of collector automobiles by excluding them from the higher capital gains tax rates applied to "collectibles." Capital gains tax is the tax on profits from selling assets, and collectibles (such as art, antiques, or rare coins) are currently taxed at a maximum rate of 28%, higher than the standard rate for most investments (up to 20%).
Key Provisions
- Amendment to Tax Code: The bill modifies Section 1(h)(5)(A) of the Internal Revenue Code of 1986 by adding the phrase "and excluding automobiles" to the definition of collectibles (as referenced in Section 408(m), ignoring a specific exemption for personal-use property).
- Effective Date: The change applies to taxable years beginning after December 31, 2025, meaning it would first affect tax returns filed in 2027 for sales in 2026 or later.
Significant Changes to Existing Law
- Under current law, automobiles held as investments can be classified as collectibles, subjecting their sale profits to the 28% capital gains tax rate.
- This bill removes automobiles from that classification, allowing profits from their sale to be taxed at the lower long-term capital gains rate (0%, 15%, or 20%, depending on income level), similar to stocks or other non-collectible assets.
- No other changes are made to the definition of collectibles or capital gains rules.
Potential Impacts
- On Citizens: Owners of collector cars (e.g., classic or vintage vehicles) would face lower taxes on sales, potentially saving thousands of dollars per transaction. This could encourage buying, selling, and preserving such vehicles without the tax penalty.
- On Government Agencies: The Internal Revenue Service (IRS) would need to update guidance and enforcement to exclude automobiles from collectible status, but the administrative burden is likely minimal. The federal government may see a small reduction in tax revenue from affected sales.
- On International Relations: No direct impact, as the bill focuses solely on domestic U.S. tax policy.
Main Stakeholders Affected
- Individual Taxpayers and Collectors: Primary beneficiaries, including hobbyists, investors, and enthusiasts who buy/sell classic cars for profit.
- Automobile Industry and Dealers: Could indirectly benefit from increased market activity in collector vehicles.
- U.S. Treasury and IRS: Responsible for implementing and collecting taxes under the revised rules.
Notable Legal, Constitutional, or Political Implications
- Legal: The amendment is straightforward and fits within Congress's authority to adjust tax rates under the Internal Revenue Code. It may require IRS regulations to clarify what qualifies as an "automobile" (e.g., cars, trucks, but likely excluding motorcycles or non-road vehicles unless specified).
- Constitutional: No apparent challenges; tax legislation like this is routine and does not infringe on rights such as free speech or due process.
- Political: As a targeted tax relief measure, it could appeal to automotive interest groups and Republican lawmakers (introduced by Rep. Perry), but might face debate over lost revenue or favoritism toward niche hobbies. If passed, it signals a policy shift toward easing taxes on personal investments.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-02-13: Referred to the House Committee on Ways and Means.
- 2026-02-13: Introduced in House
- 2026-02-13: Introduced in House
Bill Versions
- Collector Automobile Relief Act — issued 2026-02-13 — PDF (2 pages)