New Car Loan Interest Deduction Available

The One Big Beautiful Bill Act created a brand-new deduction that allows you to deduct a portion of the interest you pay on a qualified passenger vehicle loan.

What's New?

For tax years 2025 through 2028, taxpayers can deduct interest paid on a qualifying car loan up to $10,000 per year. You don’t have to itemize to claim the deduction.

What Loans Qualify?

The loan must:

• Be incurred after December 31, 2024

• Be secured by a first lien

• Be used to purchase a vehicle for personal use

When This Applies

The deduction begins in 2025 and expires after 2028.

Why This Matters

A car is one of the larger expenses most people have, and interest adds up. Now, taxpayers have a way to recover part of that cost, especially helpful for families financing a new vehicle.

Each week, I share a clear, bite-sized tax insight straight from my continuing education so you can stay informed without sifting through tax changes.

Next week, we discuss what vehicles qualify for the deduction.

Thanks for reading,

Brandy Sparkman, EA

I’ll keep learning so you can stay focused on what you do best.

See you next week for another Tax Minute.