Signed into law on July 4, 2025, the so-called One Big Beautiful Bill Act is giving car buyers something to smile about—aside from that new car smell. In a throwback to benefits we didn’t know we missed, the bill revives a little-known tax perk: the ability to deduct interest on car loans. It may not be glamorous, but it’s definitely worth a second look.
According to a detailed breakdown from CarFinderZone, the law allows individuals to deduct up to $10,000 per year in car loan interest as an above-the-line deduction. This means you don’t have to itemize your deductions to benefit from it.
However, there are eligibility requirements. To qualify for the full deduction, single filers must have a Modified Adjusted Gross Income (MAGI) under $100,000, while joint filers must stay under $200,000. The deduction begins to phase out beyond these thresholds. The vehicle must also be new, used for personal purposes, and finally assembled in the United States.
Only secured loans qualify, so leases and private-party financing are excluded. The loan must also be initiated between January 1, 2025, and December 31, 2028. If you’re unsure whether your vehicle qualifies, CarFinderZone recommends confirming the final assembly location with your dealer.
The potential savings are nothing to scoff at. For instance, if you finance a $60,000 vehicle at 6% interest, you could pay around $3,227 in interest in the first year alone. At a 22% tax rate, that translates to roughly $710 back in your pocket. That’s not a bad reward for simply financing a new car.
For more details and a breakdown of qualifying criteria—including a partial list of car models with final assembly in America—visit the original article at How to Take Advantage of the Car Loan Interest Deduction in the New Tax Bill.
As always, consult a tax professional to ensure you’re meeting all requirements and maximizing your savings.