What You Should Know

What’s the Deal?

From 2025 to 2028, buyers of new, U.S.-assembled cars—including cars, SUVs, vans, pickup trucks, and motorcycles under 14,000 lb—can deduct up to $10,000 per year in interest paid on qualifying auto loans. It’s an above-the-line deduction, meaning you don’t need to itemize to benefit.

Eligibility Highlights

  • Vehicle must be new, assembled in the U.S.
  • Loan must be originated after December 31, 2024, and secured by the vehicle.
  • Personal use only—no commercial, fleet, or lease transactions.

How Much Could You Save?

Based on a $44,000 loan at ~9.3% interest, this could translate to around $2,200 in savings across four years—not bad for simply borrowing the way you normally would.

Keep These in Mind

  • New reporting rules now require lenders to report auto loan interest paid to the IRS via new 1098-style forms.
  • The deduction may be modest compared to tariff-related costs—analysts estimate the benefit may not fully offset those increases.

Tips for Buyers at Payne Edinburg CDJR

  • Look for the “Assembled in USA” label on the Monroney sticker or VIN—if you see it starting with 1, 4, or 5, that indicates final assembly in the U.S.
  • Confirm that your vehicle purchase is new and for personal use—only then does the deduction apply.
  • Get pre-approved for financing and ask your lender about the new reporting requirements—ensure they’ll provide the documentation you need at tax time.
  • Work with your tax advisor early to make sure you’ll qualify and to integrate this deduction with your broader tax-saving strategies.