Federal Auto Loan Interest Deduction

A new federal auto loan interest deduction allows qualifying customers to save up to $10,000 annually on new vehicle loan interest across all vehicle lines that have undergone final assembly in the United States.

Deductible Amount

Eligible taxpayers may deduct up to $10,000 in annual interest on loans for qualifying new personal-use vehicles. This deduction is available for tax years 2025 through 2028.

Applicability Period

This deduction applies to new gas-powered, hybrid, and electric vehicles with loans originating between January 1, 2025 and December 31, 2028.

Vehicle Eligibility

To qualify, vehicles must have undergone final assembly in the United States.

Qualifying Models

Income Caps and Deduction Limits

Individuals must have an income of $100,000 or less, and married couples filing jointly must be at or below $200,000. The deduction phases out above those thresholds. Annual interest deductions are capped at $10,000 per year.

Additional Considerations

• The deduction applies whether you itemize or take the standard deduction.
• Only personal-use vehicles are eligible. Business or commercial vehicles do not qualify.
• Refinanced loans may qualify if certain requirements are met.

Disclaimer

Please consult a qualified tax professional to confirm your personal eligibility. This content is for informational purposes only and does not constitute legal or tax advice.