Federal and State Legislative and Policy Updates

First Up – National Updates relevant to ALL MidAtlantic IADA members

The FTC’s “Negative Option Rule” (aka – Click to Cancel Rule) shot down by the Eighth Circuit US Court of Appeals just shy of its’ effective date of July 14, 2025:

Just days before enforcement was to begin, the “Negative Option Rule” was squashed over “procedural deficiencies in the rulemaking process” – very similar to the CFPB’s “CARS Rule”.

Several states have implemented their own versions of the Negative Option Rule or are in the midst of doing so – among those are CA, CT, MA, MD, NJ, NY & PA. Be sure to keep an eye on our MidAtlantic IADA updates in the magazine and our blast emails for local Attorney Generals’ advice.

This Rule requires all businesses to maintain records of “unambiguous affirmative consent” for any subscription, recurring payments or direct marketing. The Rule also required businesses to create or provide a “simple mechanism for cancellation.”

The Court held that the FTC’s Rule had “procedural deficiencies”, NOT that there was anything inherently wrong with the Rule, or that the court did not agree with the spirit or intent. It is unclear whether the FTC, under new leadership, will let the “Click to Cancel” Rule drop, attempt to seek Supreme Court review or restart the rulemaking process on this topic.

(Sources: -Hudsoncook.com; “Hudson Cook Enforcement Alert: Eighth Circuit Vacates FTC’s Negative Option Rule”; by Robert D. Tilley and Kristen Yarrows; property of Hudson Cook LLP; published online 7/9/2025-ConsumerFinancialServicesLawMonitor.com; “Eighth Circuit Vacates FTC’s Negative Option Rule for Procedural Violations”; by Brooke Conkle, Jason Cover, Chris Capurso, Taylor Gess and Carlin McCrory; property of Troutman Pepper Locke; published online 7/10/2025)

The “One Big Beautiful Bill Act”: How It Might Impact You and Your Business

Quick Facts: The “One Big Beautiful Bill Act” (OBBBA) was passed in the Senate July 1, 2025 by a vote of 51/50, with Vice President Vance being the deciding vote. The Act passed in the Congress on July 3, 2025 by a vote of 218/214. President Trump signed the Act into law on July 4, 2025.

On the personal finance side, the OBBBA makes several of the tax cuts from the 2017 “Tax Cuts & Jobs Act” (TCJA). The benefits of the most recent extension as part of the OBBBA largely benefits individuals:

• Income Tax Rates: the OBBBA makes the following income tax rates permanent to their respective tax brackets – 10%, 12%, 22%, 24%, 32%, 35% and 37%.
• Standard Deductions: the doubled standard deductions under the TCJA are now permanent - $15k for individuals and married filing separately, $30k for married filing jointly and $22.5k for head of household. The OBBBA also adds new additional standard deductions for seniors over 65 and those who are legally blind.
• 529 Accounts: the OBBBA now allows tax free distributions for additional educational expenses - elementary & secondary schools (including private & religious schools), qualified higher education expenses (besides tuition) and “qualified post-secondary credentialling expenses”.
• State & Local Tax (SALT) deductions: previously capped at $10k, the OBBBA temporarily raises the cap to $40k with a 1% increase annually through 2029 (will return to $10k in 2030).
• Mortgage Interest Deduction: most notably, under the OBBBA, the deduction for interest on home equity debt NOT related to the improvement of your home was ELIMINATED.
• Charitable Deductions: expanded to include a permanent deduction available to all taxpayers.
• Miscellaneous Itemized Deductions: unreimbursed employee expenses, home office expenses & tax preparation expenses are permanently eliminated.

As for the four BIG items that have drawn the most attention:

• No Tax on Overtime (OT): workers are eligible for a deduction for qualified OT pay of $12.5k ($25k for married filing jointly). This deduction, not exemption, is temporary for tax years 2025-2028. The Federal W2 will be redesigned to include a field for qualifying OT.
• No Tax on Auto Loan Interest: reminiscent of pre-1986? Not quite… the temporary provision in the OBBBA has a few restrictions:
  • Loans on NEW autos, SUVs & “passenger” truck
  • the vehicle MUST be assembled in the US
  • deduction is limited to $10k
  • deduction phases out at an individual income of over $100k ($200k for married filing jointly)
• Elimination of Most Clean Energy Credits: takes effect 180 days after signing (12/31/2025); CAFE Fines Eliminated; All EV Tax Credits End 9/30/2025.
• FEDERAL (not state) Estate Taxes: permanent exemption increase - Federal estate exclusion amount for 2025 is $13,990,000, increasing to $15MM per person for 2026 & adjusted for inflation in the future.

Breaks for Businesses under OBBBA:

• “Pass-Through” Entities: the provision under TCJA for LLCs & S-corps where businesses are not taxed separately, but at individual rates less a 20% deduction was set to expire at the end of 2025. It has been made permanent.
• Small Business Stock: tiered “Exclusion from Gain” on “Qualified Small Business Stock” (QSBS) based on the date purchased will continue: 50% for stock held at least 3 yrs, 75% for stock held at least 4 yrs, 100% for stock held at least 5 yrs. The exclusion limitation increases from $10MM to $15MM and will be adjusted for inflation.
• New Rules for Expense: up to 100% bonus depreciation based on the type of asset, subject to certain limits, has been made permanent under OBBBA. The business depreciation has also been bumped up to $2.5MM.
• COVID Employee Retention Credit (ERC): under the OBBBA, the IRS can not issue refunds for claims after 1/31/2024. Penalties for ERC mill promoters and extended ERC auditing/review powers have been granted to the IRS.

What was proposed or rumored to have been included in the OBBBA but was not included in the final Act?

• Corporate Tax Rate Reduction
• Reductions in Capital Gains Taxes
• Tax on Carried Interest
• Corporate SALT cap

(Sources: -MayerBrown.com; “One Big Beautiful Bill Act Introduces Significant Domestic and International Tax Changes” by Lucas Giardelli, Remmelt Reigersman, Warren S Payne, Juan F Lopez Valek and Julie S Burrall; property of Mayer Brown LLP; published under Mayer Brown Insights 7/9/2025. Forbes.com; “What the One Big Beautiful Bill Act Will Mean for You and Your Business” by Kelly Phillips Erb; property of Forbes Media LLC; published under Forbes: Editor’s Pick 7/4/2025, updated 7/11/2025)

MidAtlantic IADA would like to remind everyone again to please always error on the side of caution and consult your accountant or tax expert before changing your personal or business practices.

Maryland DOT – New Tax on Rental Vehicles & Exemption Established for Dealership “Loaners”

Two bills related to tax on rental & loaner vehicles were enacted that took effect July 1, 2025 by MDOT:

• Chapter 604 – Establishes an Excise Tax on RENTAL vehicles of 3.5% of the vehicles’ fair market value. This was an addition to Transportation Article, §13-809 (c)(1)(ii).
• Chapter 214 – EXEMPTION from the Rental Excise Tax on vehicles owned by licensed vehicle dealers ONLY IF the vehicle will be provided to a customer for use “while the customer’s vehicle is not in use due to repair, maintenance or other vehicle service performed by the dealer”. This was added as Transportation Article, §13-810 (g). For audit purposes, please open a Repair Order to prove that the vehicle is being used as a LOANER not a traditional RENTAL.

Per MDOT, if the vehicle is being used as a traditional RENTAL, the correct RENTAL taxes and fees are required to be submitted.

(Source: MDOT Bulletin Update D-06-25-04, published to the Maryland Department of Transportation website and sent to all approved MDOT Licensed Agents 6/27/2025)

Pennsylvania Dealers Face Upcoming Inspection Updates & Biennial PennDOT Fee Increases

Updates coming to PA Inspection Regulations

Rumors that PA was eliminating inspections were circulating at the same time PennDOT proposed changes and began the public hearing phase of inspection updates. They are now in the final approval process.

• For vehicles: the revisions include updates to scrub lines, headlight height, exhaust exit locations, acceptable vs. unacceptable locations and area size of rust/rot/accident damage, headlight brightness and an expansion of the visual field for assessing glass damage. There is also a new section addressing alternative fuel systems and controls.
• For inspection stations and mechanics: Penalties for “Major Infractions” are stiffened and fines increased. Penalties for “Careless Infractions” are adjusted to better reflect the severity of the problem – from an honest mistake or forgetting to enter a single item in the Inspection Record.

Per the filing, the effective date “will be upon publication in the Pennsylvania Bulletin”. We are monitoring this weekly and will update members via blast email. If you are not on our blast email list, please call Cyndi in our Membership Department to be sure we have your correct email for urgent updates.

(Source: -Regulatory Analysis Form, Department of Transportation, IRRC Document #3435 dated April 30, 2025, compiled by Steve Madrak and Laura Krol; inclusive of the “Notice of Proposed Rulemaking”, Document/Fiscal Note #18-484, approved by the Deputy General Counsel January 21, 2025, and the Deputy Attorney General April 10, 2025)

PennDOT Fee Increases Took Effect July 1, 2025

A quick reminder the biennial “Price Adjustments” took effect July 1. Act 89 of 2013 allows PennDOT to adjust pricing of transportation products “at the Department’s discretion” by as much as the published “Consumer Price Index” (CPI), every odd year on July 1st. PIADA Special Services WILL NOT be increasing our processing fees for 2025.

• Please ensure that you charge the correct fees for all transactions ON OR AFTER July 1, 2025. Failure to charge the new fees may result in title work being rejected.
• Please forward all transactions completed June 30, 2025 or prior AS SOON AS POSSIBLE to PIADA Special Services for processing.
• For a complete updated listing of fees, please visit www.pa.gov/dmv and search Form MV-70S. This was updated to reflect the correct new pricing at 12:01am on July 1, 2025.
• UPDATED FEE POSTERS AVAILABLE FOR PICK-UP OR TO SHIP DIRECT TO YOUR LOCATION! The posters will remain only $15 each, plus postage. Please contact Cyndi to order. Please post one fee poster per title document signing area.

Feel free to reach out to our Title Team with any questions. If you did not receive a copy of the PennDOT Bulletin 25-13 via our blast emails on June 30 and July 1, 2025, please visit www.pa.gov/dmv and search Bulletin 25-13.

WE NEED YOUR HELP!

Please feel free to contact us regarding any local, state or national legislative or policy concerns! We can not help or get involved if we are unaware of a situation brewing. Please contact Kathy in Training and Compliance with any audit, compliance, legislative, policy or training related questions.

Please encourage ALL your automotive friends – franchise or independent dealerships, inspection stations or service centers, rebuilders, scrap yards and salvage distributors to JOIN MIDATLANTIC IADA TODAY! It is only through strength in numbers that we are able to approach lawmakers and effect the changes you want to see!