New car purchasers could see a tax break in the new year if they’re willing to buy American-made.
The Department of the Treasury and the Internal Revenue Service (IRS) released guidance Wednesday on the federal government’s new “No Tax on Car Loan Interest” provision enacted through last year’s Republican tax and spending bill.
The provision creates a new deduction up to $10,000 for interest paid on vehicle loans incurred after Dec. 31, 2024, for purchase of new made-in-America vehicles for personal use.
Qualified vehicles include those that are new, not used for business purposes, and received their final assembly in the United States, according to the released guidance.
While the deduction could be used any any car purchased with a loan, it would not apply to cars that are leased.
The provision impacts any loan taken out to purchase a new car after Dec. 31, 2024, and will remain in effect through Jan. 1, 2029.
The Department of the Treasury and the IRS are accepting comments on the new rules through Feb. 2.
People wishing to comment and looking for more information about the regulations can do so on the federal regulations website.
Anyone who takes standard deductions or itemizes each year can receive the new deduction against loans for new cars, trucks, SUVs and other motor vehicles with at least two wheels built in the United States.
The provisions also include measure benefitting taxpayers with mixed-used vehicles. Effectively, if the vehicle is used for personal reasons more than 50% of the by the taxpayer or a family member, any loan interest related to the vehicle qualifies.
That “personal use” provision will be determined solely by the taxpayer’s intent when they take the loan out.
President Donald Trump led the Republican-controlled Congress to pass his “One, Big, Beautiful Bill” last year.
One of the provisions included in the bill was the tax deduction for new car loans.
Taxpayers won’t be responsible for much under the new provision apart from applying the deduction on their taxes and determining whether or not a vehicle is for personal use.
Lenders around the nation, about 35,000 businesses, will be responsible for tracking the interest, and reporting it to the IRS and taxpayers.
Paul Liotta is the New York City Hall reporter for the Staten Island Advance covering the day-to-day happenings of Mayor Eric Adams and the New York City Council. In journalism for almost a decade, Liotta… more
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