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SECOND REGULAR SESSION
HOUSE BILL NO. 2646
103RD GENERAL ASSEMBL Y
INTRODUCED BY REPRESENT A TIVE BYRNES.
6477H.01I JOSEPH ENGLER, Chief Clerk
AN ACT
T o amend chapter 135, RSMo, by adding thereto one new section relating to a tax credit for
certain vehicle loan interest payments.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Chapter 135, RSMo, is amended by adding thereto one new section, to be
2 known as section 135.1685, to read as follows:
135.1685. 1. This section shall be known and may be cited as the "Missouri No
2 T ax on Car Loan Inter est T ax Cred it".
3 2. As used in this section, the following terms mean:
4 (1) "Applicable passenger vehicle", any new vehicle:
5 (a) The original use of which commences with the taxpayer for personal use;
6 (b) Which is manufactur ed primarily for use on public street s, ro ads, and
7 highways, but shall not include a vehicle operated exclusively on a rail or rails;
8 (c) Which has at least two wheels;
9 (d) Which is a car , minivan, van, sport utility vehicle, pickup truck, or
10 motor cycle;
11 (e) Which is tr eated as a motor vehicle for purposes of T itle II of the Clean Air
12 Act;
13 (f) Which has a gross vehicle weight rating of less than fourteen thousand
14 pounds; and
15 (g) The final assembly of which occurr ed entirely within the state of Missouri
16 and which was sold in this state on or after January 1, 2026;
EXPLANA TION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is
intended to be omitted from the law . Matter in bold-face type in the above bill is proposed language.
17 (2) "Final assembly", the pro cess by which a manufactur er prod uces an
18 applicable passenger vehicle at, or thr ough the use of, a plant, factory , or other place
19 fr om which the vehicle is deliver ed to a dealer with all component parts necessary for
20 the mechanical operation of the vehicle included with the vehicle, whether the
21 component parts are permanently installed in or on the vehicle;
22 (3) "Qualified amount", for any qualified taxpayer in a given tax year , the total
23 amount of the qualified passenger vehicle loan inter est paid or accrued during the tax
24 year , not to exceed ten thousand dollars per qualified taxpayer per tax year;
25 (4) "Qualified passenger vehicle loan interes t", any intere st which is paid or
26 accrued during the tax year on indebtedness incurr ed by the taxpayer after December
27 31, 2025, for the pur chase of, and that is secured by a first lien on, an applicable
28 passenger vehicle for personal use. The term qualified passenger vehicle loan interest
29 shall include indebtedness that res ults fr om refi nancing any indebtedness and that is
30 secur ed by a first lien on the applicable passenger vehicle with r espect to which the
31 r efinanced indebtedness was incurr ed, but only to the extent the amount of such
32 r esulting indebtedness does not exceed the amount of such ref inanced indebtedness.
33 Indebtedness described under this subdivision shall not include any indebtedness owned
34 to a person who is relat ed to the taxpayer , within the meaning of such term as described
35 under 26 U.S.C. Section 267(b) or Section 707(b)(1). The term qualified passenger
36 vehicle loan interes t shall not include any amount paid or incurr ed on a loan to finance
37 fleet sales, a loan incurr ed for the purc hase of a commer cial vehicle that is not used for
38 personal purposes, any lease financing, a loan to finance the pur chase of a vehicle with a
39 salvage title, or a loan to finance the pur chase of a vehicle intended to be used for scrap
40 or parts;
41 (5) "Qualified taxpayer", any individual subject to the state income tax imposed
42 under chapter 143, excluding the withholding tax imposed under sections 143.191 to
43 143.265, who purch ased a new applicable passenger vehicle and paid or accrued
44 qualified passenger vehicle loan interes t during the tax year for which the tax cr edit is
45 claimed;
46 (6) "T ax cre dit", a cr edit against the tax otherwise due under chapter 143,
47 excluding withholding tax imposed under sections 143.191 to 143.265.
48 3. For all tax years beginning on or after January 1, 2026, but on or before
49 December 31, 2029, a qualified taxpayer shall be allowed to claim a tax cred it against
50 the taxpayer's state tax liability in an amount equal to the taxpayer's qualified amount,
51 subject to the income provi sions under subsection 4 of this section.
52 4. The amount which is otherwise allowable as a tax cr edit under subsection 3 of
53 this section as qualified passenger vehicle loan interes t, determined without r egard to
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54 this subsection and after the application of subsection 3 of this section, shall be reduc ed,
55 but not below zer o, by two hundr ed dollars for each one thousand dollars, or portion
56 ther eof, by which the Missouri adjusted gross income of the taxpayer , as defined in
57 section 143.121, for the tax year exceeds one hundr ed thousand dollars or two hundr ed
58 thousand dollars if filing a combined Missouri income tax ret urn.
59 5. Inter est shall not be trea ted as qualified passenger vehicle loan inter est under
60 this section unless the taxpayer includes the vehicle identification number of the
61 applicable passenger vehicle on the r eturn of tax for the tax year .
62 6. T ax cre dits issued under the pr ovisions of this section shall not be r efundable.
63 No tax cred it claimed under this section shall be carried forward to any subsequent tax
64 year .
65 7. No tax credit claimed under this section shall be assigned, transferred, sold, or
66 otherwise conveyed.
67 8. The department of rev enue shall pr omulgate all necessary rules and
68 r egulations for the administration of this section including, but not limited to, rules
69 r elating to the verification of a taxpayer's qualified amount. Any rule or portion of a
70 rule, as that term is defined in section 536.010, that is crea ted under the authority
71 delegated in this section shall become effective only if it complies with and is subject to
72 all of the pr ovisions of chapter 536 and, if applicable, section 536.028. This section and
73 chapter 536 are nonseverable and if any of the powers vested with the general assembly
74 pursuant to chapter 536 to revi ew , to delay the effective date, or to disappr ove and annul
75 a rule are subsequently held unconstitutional, then the grant of rulemaking authority
76 and any rule prop osed or adopted after August 28, 2026, shall be invalid and void.
77 9. Under section 23.253 of the Missouri sunset act:
78 (1) The prov isions of the new pr ogram authorized under this section shall sunset
79 four years after the effective date of this section unless reau thorized by an act of the
80 general assembly; and
81 (2) This section shall terminate on September first of the calendar year
82 immediately following the calendar year in which the prog ram authorized under this
83 section is sunset; and
84 (3) Nothing in this subsection shall prev ent a taxpayer fr om claiming a tax credit
85 pr operly issued before this pr ogram was sunset in a tax year after the prog ram is sunset.
✔
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