2026 OnE Big Beautiful Bill Updates
New Car? New Tax Break.
If you financed a new American-made vehicle, you could deduct up to $10,000 in interest. We’ll check your VIN and get you every dollar back.
"No Tax on Car Loan Interest"
What Vehicle Buyers Need to Know
Overview of the Deduction
Individuals may deduct interest paid on a loan used to purchase a qualified vehicle for personal use that meets other eligibility criteria.
Important: Lease payments do not qualify for this deduction.
If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.
What Counts as Qualified Interest
Interest must be paid on a loan that:
- Originated after December 31, 2024
- Was used to purchase a vehicle originally used by the taxpayer
- Was secured by a lien on the vehicle
- Was for a personal-use (nonbusiness) vehicle
What Counts as a Qualified Vehicle
Car
Minivan / Van
SUV
Pick-up Truck
Motorcycle
< 14,000 lbs GVWR
A qualified vehicle must have a gross vehicle weight rating of less than 14,000 pounds and must have undergone final assembly in the United States.
How to Verify US Assembly
Three Ways to Confirm:
- Check the vehicle label at the dealership
- Use the Vehicle Identification Number (VIN)
- Visit the NHTSA VIN Decoder to verify vehicle assembly location
Income Phase-Out Limits
Deduction phases out for taxpayers with modified adjusted gross income over:
Who Qualifies
- Available to both itemizing and non-itemizing taxpayers
- You must include the VIN on your return for any year you claim the deduction
Reporting Requirements
Lenders or other recipients of qualified interest must file information returns with the IRS and provide statements to taxpayers showing the total amount of interest received during the taxable year.
No Tax on Car Loan Interest
Get answers to the most common questions about the new car loan interest deduction
What does "No Tax on Auto Loan Interest" mean?
"No Tax on Car Loan Interest" is a new deduction that's part of the One Big Beautiful Bill Act signed into law on July 4, 2025. This write-off allows eligible taxpayers to deduct up to $10,000 in car loan interest on a qualifying vehicle from their taxable income for tax years 2025 through 2028.
Is the $10,000 car loan interest a tax deduction?
Yes. Taxpayers who buy a new car assembled in the U.S. may be able to deduct up to $10,000 in interest paid on that loan on their tax returns beginning in 2025. Only the interest portion of your car payment is deductible—not the loan principal. The deduction applies to tax years 2025 through 2028.
What vehicles qualify for the car loan interest deduction?
A qualified vehicle is a car, minivan, van, SUV, pickup truck, or motorcycle that has a gross vehicle weight rating of less than 14,000 pounds and underwent final assembly in the United States. The vehicle must be new (not used), purchased for personal use, and the loan must have originated after December 31, 2024.
Can I deduct interest if I refinance my car loan?
Yes. If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction, as long as the original loan met the requirements (originated after December 31, 2024, secured by a lien on the vehicle, for a qualifying US-assembled vehicle).
Do lease payments qualify for the car loan interest deduction?
No. Lease payments do not qualify for this deduction. Only interest paid on a loan used to purchase a qualified vehicle is eligible. The loan must be secured by a lien on the vehicle and used to purchase (not lease) the vehicle for personal use.
How do I verify my vehicle was assembled in the United States?
There are three ways to verify US assembly: Check the vehicle information label at the dealership, use the Vehicle Identification Number (VIN), or visit the NHTSA VIN Decoder website to verify the vehicle's assembly location. You must include the VIN on your tax return for any year you claim this deduction.
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