Car Loan Tax Deduction

New Tax Breaks on New Vehicles

A new federal tax deduction lets qualifying customers deduct up to $10,000 annually on interest paid for new vehicles. Many new vehicles are proudly assembled right here in the U.S., making them eligible for this tax break. That means you can drive a quality new vehicle and keep more of your hard-earned money. It's a win for your wallet, and a win for America.

What's this new car tax deduction?

It's a new way to potentially save on your taxes when you finance a new vehicle. You may be able to deduct up to $10,000 in annual interest paid for new vehicles assembled right here in the U.S. This applies whether you itemize deductions or take the standard deduction.

Are there income limits?

Yes, the deduction starts to phase out for individuals earning over $100,000 (or $200,000 for married couples filing jointly).

What kind of auto debt qualifies?

This deduction is for financing personal vehicles only. It doesn't apply to business or fleet purchases, and leases are not included.

Is there a purchase-by date?

It applies to interest paid on new vehicles financed after December 31, 2024, for tax years 2025 through 2028. Contracts refinanced before 2025 don't qualify.

Which vehicles are eligible?

Your dealer can confirm specific models, but many new vehicles assembled in the U.S. qualify.

Can my dealer help me with the deduction?

Your dealer can help with financing options. For personalized tax advice, we highly recommend speaking with a qualified tax or legal professional