If you’re in the market for a new car, you could benefit from a new tax provision which could save you even more money. As part of the One Big Beautiful Bill Act, the law now allows for a temporary tax deduction on passenger vehicle loans on purchases made after December 31, 2024.
So what does this mean for you? If you are planning to buy a new car, it could result in another tax deduction. Here’s what you need to know about the “Made in America Auto Loan Interest Deduction.
How The Made in America Auto Loan Interest Deduction Works
Under the Act signed into law on July 4, 2025, car buyers may qualify for a deduction of up to $10,000 of auto loan interest per year. This is considered an “above-the-line” tax deduction, which means buyers can take advantage of the deduction even if they don’t itemize their taxes. You can use our Vehicle Payment Calculator to estimate how much you might pay in interest on your car loan.
However, the deduction applies to very specific purchases of cars, trucks, SUVs, and even motorcycles. To qualify for the tax deduction, you must meet the following criteria:
- Purchase a new vehicle for personal use (not business) between January 1, 2025, and December 31, 2028.
- Final assembly of the vehicle must be in the United States.
- Buyers must finance their purchase with a new auto loan. Leases and all-cash purchases do not count for the tax deduction.
- Fall into IRS income requirements.
Talk to your tax professional before making any financial decision to determine if and how you could benefit from this deduction.
What Does It Mean for Your Car Shopping?
If you are in the market for a new car (not a used car), are not planning to use it for business and fall into the IRS income requirements, now might be the best time to shop for a car. The law now allows you to deduct up to $10,000 of auto loan interest, which could save you money at the end of each year. And because it is a “above-the-line” deduction, it applies to everyone who purchased a new vehicle made in America starting on January 1, 2025.
That doesn’t necessarily mean that you should immediately start shopping to replace your current vehicle. Before making any decision, it’s important to assess your overall financial health and your actual need to purchase a car. Some questions you may want to ask include:
- Is my current vehicle paid off and in good working condition?
- How much am I paying in maintenance each month?
- Have I saved up for a down payment outside of my long-term savings goals?
By understanding your overall financial health, you can make the best decision to determine if a brand new vehicle – and the corresponding tax deduction – is right for you.
Get AutoSMART On Your Next Car Purchase With SESLOC
SESLOC Credit Union members can access a set of tools which will boost their auto shopping experience. With AutoSMART, you can research the vehicles that are right for your lifestyle, discover dealers with available inventory, schedule appointments for test drives, and even get pre-approved for an auto loan. Everything you need to make auto shopping a breeze is right at your fingertips. Visit our AutoSMART website today to learn more and get started looking for your next new car, truck, or SUV today.
Note: Stay tuned for updates coming later this fall regarding the auto loan interest forms or documents needed from SESLOC to file your 2025 tax return.