The GOP’s freshly signed “Big, Beautiful Bill” comes with a new tax break for car owners. Americans can now deduct up to $10,000 in interest paid on car loans—if they meet several conditions.
To qualify, the vehicle must be brand new and purchased between January 2025 and December 2028. It also has to be made for personal use—not business—and weigh under 14,000 pounds. That includes cars, SUVs, trucks, vans, and motorcycles.
But there’s a catch: final assembly must happen in the U.S. That means the engine, body, and other major parts must be put together at an American factory. “Final assembly refers to a process where the major components… are fully integrated,” auto expert Lauren Fix told FOX Business.
The law doesn’t spell out every detail of what counts as “final assembly.” But Fix says dealers will likely promote eligible vehicles, and the IRS is expected to release a list of qualifying makes and models—similar to what they already do for EV tax credits.
Only loans that are standard, secured auto loans are eligible. Some refinanced loans may qualify, too. And yes, you’ll need to report your VIN on your tax return to claim the deduction.
Best part? You don’t have to itemize your deductions to claim it. But there’s an income limit. If you’re single and make over $100,000—or married filing jointly and make over $200,000—the deduction shrinks by $200 for every $1,000 over the cap.
Fix says this rule could be a win for American carmakers like Ford, GM, and Tesla. “The requirement for final assembly in the U.S. could benefit American manufacturing and jobs,” she said.
But the law leaves out used cars and imports. That could hurt lower-income buyers, Fix warned. “Eighty percent of cars under $30,000 are imported,” she added. “This bill doesn’t help the people most likely to need it.”
Still, for Americans looking to buy a new car and stay under the income threshold, this could be a welcome break. Just make sure it’s built in the USA.