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AB-490 • 2026

Personal Income Tax Law: deduction from gross income: car loan interest payments.

Personal Income Tax Law: deduction from gross income: car loan interest payments.

Taxes
Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor
Tangipa
Last action
2026-02-02
Official status
From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
Effective date
Not listed

Plain English Breakdown

The official source does not specify what additional information is required for bills authorizing a new tax expenditure beyond the existing law's requirements.

Allowing Car Loan Interest Deduction

AB-490 allows people to deduct car loan interest payments from their income taxes for taxable years starting in 2026 through 2030.

What This Bill Does

  • Allows taxpayers to subtract the interest paid on a qualified motor vehicle loan from their gross income when calculating adjusted gross income.
  • Limits this deduction to one qualified motor vehicle loan per taxpayer.
  • Applies only for taxable years starting in 2026 through 2030.

Who It Names or Affects

  • Taxpayers who have a car loan with interest payments.

Terms To Know

Qualified motor vehicle loan
A specific type of car loan that meets certain requirements set by the bill.
Adjusted gross income
The total income minus allowable deductions before calculating tax liability.

Limits and Unknowns

  • This deduction is only available for a limited time, from January 1, 2026 to December 31, 2030.
  • It's not clear which specific car loans will qualify under the bill’s definition of 'qualified motor vehicle loan'.

Bill History

  1. 2026-02-02 California Legislative Information

    From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.

  2. 2026-01-31 California Legislative Information

    Died pursuant to Art. IV, Sec. 10(c) of the Constitution.

  3. 2025-05-05 California Legislative Information

    In committee: Set, second hearing. Held under submission.

  4. 2025-03-17 California Legislative Information

    In committee: Set, first hearing. Referred to REV. & TAX. suspense file.

  5. 2025-02-24 California Legislative Information

    Referred to Com. on REV. & TAX.

  6. 2025-02-11 California Legislative Information

    From printer. May be heard in committee March 13.

  7. 2025-02-10 California Legislative Information

    Read first time. To print.

Official Summary Text

AB 490, as introduced, Tangipa.
Personal Income Tax Law: deduction from gross income: car loan interest payments.
The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income.
This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a deduction from adjusted gross income for an amount equal to the interest paid on a qualified motor vehicle loan, as defined. The bill would limit this deduction to one qualified motor vehicle loan per taxpayer.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill also would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.

Current Bill Text

Read the full stored bill text 
Download Bill PDF