Auto Loan Interest Deduction for 2025–2028

Beginning with the 2025 tax year, taxpayers who purchase a new vehicle may be eligible to deduct auto loan interest, even if they do not itemize deductions. This temporary federal deduction applies to vehicles purchased between 2025 and 2028 and is available for qualifying personal-use vehicles.

To be eligible, the vehicle must meet specific requirements, including final assembly in the United States and a qualifying loan structure secured by the vehicle. Income limits apply, and taxpayers will be required to provide documentation such as loan statements, interest paid, and vehicle information to support the deduction.

This deduction can provide meaningful tax savings for eligible taxpayers, particularly those planning a vehicle purchase in the coming years. Because qualification depends on multiple factors, reviewing the details in advance can help ensure compliance and maximize the benefit.

Source: IRS Newsroom, One Big Beautiful Bill Provisions https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions