CAR Act

HR 7582, the CAR Act, changes how certain automobiles are taxed by removing them from the "collectibles" category for capital gains tax purposes. This means owners selling classic or collector vehicles will pay standard capital gains tax rates (typically lower than the 28% rate for collectibles) instead of the higher collectibles tax rate. The change applies to taxable years beginning after December 31, 2025, directly affecting individuals who sell qualifying collector automobiles. The bill modifies Section 1(h)(5)(A) of the Internal Revenue Code to exclude automobiles from the definition of collectibles.