This year, there’s a new tax break for those who bought a new car in 2025.  
Drivers may be able to deduct part of their loan payment from their taxes, as part of the “One Big, Beautiful Bill.”
It allows new car buyers in 2025 to write off up to $10,000 a year in interest paid on qualifying auto loans.
Only car loans for new vehicles that underwent final assembly in the United States qualify for the tax credit, and there are income limit for the full deduction: $100,000 for single filers and $200,000 for joint filers. Below those amounts, the deduction is reduced.
Scott Lambert with the Minnesota Automobile Dealers Association says there are ways to check if your car was completed in the United States.
“There’s a sticker inside on the driver door that can tell you that, and the National Highway Traffic Safety Administration also has a VIN Decoder,” Lambert said. “If you take the VIN off the dash of your vehicle and run it through their website, it will tell you if your vehicle qualifies for this.”
The tax break starts with new purchases made last year and will run through 2028.
You can learn more about this car loan tax deduction from the IRS and TaxAct.
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