Transportation Freedom Act

Summary

Creates a large, wage‑based federal tax deduction for automobile or auto‑component producers that meet U.S. final‑assembly, domestic content, worker pay, benefit, and profit‑sharing conditions, while denying a separate ordinary wage deduction for the same wages. It also nullifies several recent EPA and NHTSA vehicle emissions and fuel‑economy final rules and revokes all state vehicle‑emissions waivers (including California’s), then directs DOT and EPA to issue new CAFE and greenhouse‑gas standards for model years 2027–2035 within 180 days under tightly specified economic and technological practicability constraints and with limits on considering electric vehicles. The bill links substantial tax benefits to employer pay/benefit standards for auto workers, removes current federal and state regulatory flexibilities for vehicle emissions, and reshapes how fuel‑economy and GHG standards are set going forward. Effective dates vary: tax changes apply to taxable years beginning after enactment; waiver prohibition is effective on enactment; agencies must issue new standards within 180 days.

• Creates a 200% wage‑based federal deduction for qualifying automakers tied to high wages, pensions, retiree health, and profit‑sharing.
• Caps eligible wages at $150,000 per employee and requires wages to be at or above the 75th percentile for the worker’s occupation in the industry.
• Nullifies several recent EPA and NHTSA vehicle emissions and fuel‑economy final rules published in 2024.
• Revokes all Clean Air Act §209(b) state waivers and prohibits the EPA from granting future state waivers, explicitly affecting California’s zero‑emission mandates.
• Requires DOT and EPA to issue new CAFE and GHG standards for model years 2027–2035 within 180 days with strict economic and technological practicability constraints.
• Prohibits setting standards that would directly or indirectly require production or sale of electric vehicles and limits how vehicle baselines are constructed.
• Conditions the tax benefit on taxpayer election and certification and denies a separate ordinary wage deduction for the same wages.
• Adjusts tax accounting rules to subtract the new deduction from adjusted financial statement income to avoid double‑counting.
• No new appropriations are specified; enforcement and implementation will rely on agency rulemaking and tax administration.
• Likely to prompt legal challenges and major policy shifts in state‑federal roles for vehicle emissions standards.