In upcoming newsletters, we will highlight various changes introduced by the One Big Beautiful Bill, signed into law on July 4th, 2025. To begin this series, we are focusing on the new rules regarding the deduction for auto loan interest on personal vehicles.
Key Highlights
- Deduction Amount: Up to $10,000 per year in interest paid.
- Eligibility Window: Applies to loans originated after December 31, 2024, and is valid for tax years 2025 through 2028.
Vehicle Requirements
- Must be a new, personal-use vehicle (not for business), and the loan must be secured by a lien on the vehicle.
- Used vehicles or vehicles for resale are not eligible.
- Lease payments do not qualify.
- Interest payments to related parties do not qualify.
- A qualified vehicle is a car, minivan, van, SUV, pickup truck, or motorcycle weighing less than 14,000 pounds (GVWR) and must have undergone final assembly in the United States.
Income Eligibility
- The deduction begins to phase down at adjusted gross income levels of $200,000 for married filers and $100,000 for all other filers.
- If you are above that income level, the deduction reduces by $200 for every $1,000 you are above the income threshold.
- This deduction is available regardless of whether you itemize or take the standard deduction.
How to Verify / What You Will Need
- To verify your vehicle had final assembly in the United States, the IRS is using the VIN Decoder website from the National Highway Traffic Safety Administration.
- You will need the VIN number and the model year of your vehicle.
- Here is a direct link to the VIN Decoder website: https://vpic.nhtsa.dot.gov/decoder/
- The VIN number will also be required to be reported on your tax return, so if you believe your vehicle may qualify, please include this information with your tax documents for the upcoming filing season.
Need Help?
If you have questions or need help determining if this deduction applies to you, please contact our team at 307-577-4040.
