The
Car Loan Interest tax deduction program established under Section 70203 of
Public Law 119-21 (One Big Beautiful Bill) allows taxpayers to annually deduct
up to $10,000 of qualified loan interest for new personal-use vehicle
purchases. Leases are ineligible. To qualify:
- The interest must be on a first lien incurred after December 31, 2024
for the purchase of a new personal-use passenger vehicle (defined as a vehicle
with at least two wheels, such as a car, minivan, van, SUV, pick-up truck or motorcycle,
with a gross vehicle weight rating of less than 14,000 pounds, and that has
undergone final assembly in the United States.).
- Only vehicles that had final assembly in the U.S are eligible. To verify, check the information
label attached to the vehicle at the dealership or The National Highway Traffic
Safety Administration (NHTSA) VIN Decoder.
- Maximum annual deduction is $10,000.
- Deduction phases out for taxpayers with modified adjusted gross
income over $100,000 ($200,000 for joint filers).
To learn more, visit https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors
