On July 4, 2025, President Donald Trump signed H.R. 1, the “One Big Beautiful Bill Act,” into law, marking a significant victory for NADA and its members. After months of tireless collaboration with congressional tax-writing committees and leadership, NADA secured critical dealer-friendly provisions in this landmark tax reform legislation. These measures promise permanent tax relief and bolster the financial health of auto dealerships nationwide. Here’s a breakdown of what’s new, why it matters and what didn’t make the cut.

What’s New: Key Dealer-Friendly Provisions

Permanent Tax Relief

• Pass-Through Deduction (Section 199A): The 20% deduction for pass-through entities is now permanent, with an expanded phase-in range — $75,000 for non-joint returns and $150,000 for joint returns, up from $50,000 and $100,000, respectively. Effective for taxable years beginning after Dec. 31, 2025.
• Estate Tax: The exemption is permanently increased to $15 million for individuals and $30 million for joint filers, with annual inflation adjustments. This applies to estates of decedents and gifts made after Dec. 31, 2025.
• Interest Deduction Limitations (Section 163(j)): Reverts permanently to EBITDA-based calculations for taxable years beginning after Dec. 31, 2024, easing restrictions on interest deductions.
• Bonus Depreciation (Section 168(k)): Restores and extends 100% bonus depreciation permanently for property acquired and placed in service on or after Jan. 19, 2025.
• Expense Deduction (Section 179(b)): Permanently increases to $2.5 million, with a phase-out threshold of $4 million, effective for property placed in service after Dec. 31, 2024.

Electric Vehicle (EV) Credits Eliminated

• New EV Credit (Section 30D): Eliminated after Sept. 30, 2025, without the previously proposed exemption for manufacturers selling fewer than 200,000 EVs.
• Leasing and Commercial EV Credit (Section 45W): Eliminated after Sept. 30, 2025.
• Used EV Credit (Section 25E): Eliminated after Sept. 30, 2025.
• Clean Heavy-Duty Vehicles (IRA Section 60101): The Inflation Reduction Act’s grant program for heavy-duty electric vehicles is repealed, with unobligated funds rescinded, effective immediately.

Temporary Auto Loan Deductibility

A new above-the-line deduction allows consumers to deduct up to $10,000 in auto loan interest for new vehicles final-assembled in the U.S. This applies to taxpayers with modified adjusted gross income (MAGI) below $100,000 (individual) or $200,000 (joint). The deduction is available from 2025 through 2028.

Income Tax Rates

The modified income tax rates from the 2017 Tax Cuts and Jobs Act are now permanent, with an additional year of inflation adjustment for the 10%, 12% and 22% brackets, effective after Dec. 31, 2025.

State and Local Tax (SALT) Deductions

• Business/PTET: NADA successfully preserved the pass-through entity tax (PTET) workaround, allowing pass-through businesses to deduct certain state and local taxes at the entity level, bypassing the $10,000 SALT cap.
• Individual SALT Cap: Increases to $40,000 for 2025, with 1% annual increases through 2029, before reverting to $10,000 in 2030. The deduction phases down for incomes above $500,000.

CAFE Penalty Relief

The National Highway Traffic Safety Administration’s (NHTSA) Corporate Average Fuel Economy (CAFE) penalty for automakers not meeting standards is reduced to $0, effective immediately.

Why It Matters

These provisions deliver substantial benefits for auto dealers:

• Financial Relief: Permanent deductions like Section 199A, bonus depreciation and expanded expense deductions reduce tax burdens, freeing up capital for reinvestment.
• Estate Planning: Higher estate tax exemptions provide long-term security for family-owned dealerships.
• Leveling the Playing Field: The elimination of EV credits and CAFE penalties reduces competitive pressures on traditional vehicle sales, while the temporary auto loan deduction incentivizes purchases of U.S.-assembled vehicles.
• SALT Workaround Preservation: Maintaining the PTET workaround ensures dealers in high-tax states can maximize deductions.

NADA’s advocacy was instrumental in shaping these outcomes, particularly in preserving the PTET and securing permanent tax relief tailored to dealers’ needs.

Looking Ahead

H.R. 1 is a game-changer for auto dealers, offering immediate and long-term financial benefits. NADA remains committed to advocating for dealers as Congress tackles future legislation, including the highway reauthorization bill. For now, dealers can celebrate a hard-fought victory that strengthens their businesses and supports the broader automotive industry.

This is another win for dealers in Washington, D.C. It is an honor to serve as your Mississippi NADA director. Please let me know if I can help you in any way.