WASHINGTON — The Internal Revenue Service released new rules this week for a tax break that lets you deduct up to $10,000 in car loan interest if you buy an American-made vehicle.
This means if you’re paying interest on a car loan, you might be able to lower your tax bill. The deduction works for loans taken out after Dec. 31, 2024, to buy new vehicles assembled in the United States.
When you pay interest on your car loan each month, you can write off that interest on your taxes. This deduction specifically applies to new cars, trucks, SUVs and other vehicles built in the United States.
You can claim this deduction whether you itemize your taxes or take the standard deduction. The tax break is available for tax years 2025 through 2028.
Your vehicle must meet these requirements:
Your car loan company will send you information about how much interest you paid during the year. This is similar to how mortgage companies send you tax forms.
For 2025, lenders can provide this information through their website or app. Starting in 2026, they’ll need to send you an official tax form, similar to the mortgage interest form (Form 1098).
Your lender will tell you how much interest you paid during the year. You’ll use that number when filing your 2025 taxes in early 2026.
The IRS is accepting feedback on these new rules through Feb. 2, 2026, at Regulations.gov.
These rules were created to help you and your lender get ready for tax season, when this deduction becomes available for the first time.
For more information, visit the IRS website and search for “One, Big, Beautiful Bill provisions” or talk to a tax professional about whether this deduction can help you save money.
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