US EditionNew Tax Break on Auto Loans Could Save You Thousands, but Will It Boost Sales?
UNITED STATES, JUL 13 – Taxpayers can deduct up to $10,000 annually in auto loan interest on new U.S.-assembled vehicles from 2025 to 2028, benefiting an estimated 3.5 million loans this year, economists say.
- President Donald Trump signed a tax-cut bill into law on July 4, 2024, allowing interest on auto loans for new U.S.-assembled vehicles to be deductible from 2025 through 2028.
- This provision followed Trump's pledge last year to make such interest tax-deductible, aiming to lower ownership costs and support domestic vehicle production, with the deduction phased out for incomes from $100,000 to $150,000.
- The law covers new light vehicles weighing under 14,000 pounds that are assembled in the U.S., excludes those intended for commercial fleets, and allows individuals to deduct interest expenses on eligible auto loans up to a $10,000 annual limit regardless of whether they itemize deductions.
- Jonathan Smoke of Cox Automotive estimates that as many as 3.5 million new vehicle loans may qualify for the tax credit in 2025, with the average loan amounting to $44,000 at an interest rate of 9.3%, resulting in approximately $2,200 in tax savings over four years; Celia Winslow noted this incentive might encourage some buyers to choose purchasing.
- Although the tax break may influence financing decisions, Smoke doubts it will sway undecided buyers, but dealers like Paul Ray expect it to encourage more vehicle purchases and support American assembly jobs this year.
27 Articles
27 Articles
New Trump Tax Law Makes Auto Loan Interest Deductible for Many Americans
Millions of people receive a federal tax deduction for the interest they pay on home loans. Under President Donald Trump’s new tax-cut law, many people for the first time also could claim a tax deduction for interest on their vehicle loans. The new tax break will be available even to people who don’t itemize deductions. But there are some caveats that could limit its reach. The vehicles must be new, not used. They must be assembled in the U.S. A…
New tax break for auto loans could save some U.S. buyers thousands of dollars. But will it boost sales?
Millions of people receive a federal tax deduction for the interest they pay on home loans. Under President Donald Trump’s new tax-cut law, many people for the first time also could claim a tax deduction for interest on their vehicle loans. The new tax break will be available even to…
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