The GOP’s New Car Loan Tax Deduction: What It Means for You

fe5570_eaa728b7c0504b6882601a692f097085~mv2.png

A major tax change just hit the road. Under the recently passed “One Big Beautiful Bill,” car buyers may be able to deduct up to $10,000 per year in interest on qualifying auto loans—no itemizing required. This new benefit runs from 2025 through 2028 and applies only to new, U.S.-assembled vehicles for personal use.

But not everyone will qualify.

  • Income limits: Phases out for individuals earning over $100,000 and couples over $200,000.
  • Vehicle restrictions: Cars, SUVs, pickups, motorcycles under 14,000 pounds qualify; used cars, imports, ATVs, trailers, and campers don’t.
  • Assembly requirement: The car’s “final assembly” must take place in the U.S., confirmed on the vehicle’s info label or VIN.

Why it matters: With average new car prices around $48,000 and loan interest rates near 8.64%, buyers often pay nearly $200 per month in interest. This deduction could help—but its reach is limited. Critics point out that higher earners and those buying pricier new vehicles will benefit most, while many lower-income buyers or those preferring imports won’t qualify.

Electric vehicles may qualify if U.S.-assembled, but the OBBB also eliminates the existing federal EV tax credit for most buyers after September 30, 2025. Combined with new 25% tariffs on imported vehicles and parts, prices could rise further—even for eligible U.S.-assembled cars.

Bottom line: Even with this tax break, the best car-buying decisions come from careful budgeting, loan shopping, and long-term cost planning.

If you’re weighing whether this deduction could work in your favor, Verity CPAs can help you crunch the numbers and plan smart. Contact us at info@verity.cpa or 808.546.5026.

Embark on a journey to financial well-being!

Contact Verity CPAs today for a personalized consultation!

About Verity CPAs

Verity CPAs is a Certified Public Accounting firm licensed in both Hawaii and California. We help small and mid-size businesses, as well as government agencies, simplify complex financial challenges and move forward with confidence. Our team delivers high-quality audit, tax, accounting, and business consulting services—combining local insight with national expertise. We focus on precision, clear communication, and a people-first approach so you can make informed decisions, stay compliant, and reach your goals faster. Backed by consistent top ratings from the AICPA Peer Review Program, we bring you trusted results and peace of mind.​

Ready to get started? Contact us at info@verity.cpa or 808.546.5026.

Scroll to Top