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Federal Auto Loan Interest Deduction
(2025-2028)

How does the Auto Loan Interest Deduction Work?

Under federal tax law (H.R. 1), eligible buyers may be able to deduct qualifying interest paid on a qualifying auto loan for a new personal vehicle final-assembled in the United States.

Up to $10,000 in Annual Interest Deductions

Eligible buyers may deduct up to $10,000 per year in auto loan interest from their taxable income, helping reduce overall tax liability.

United States Assembled Vehicles Only

To qualify for the deduction, the vehicle must be assembled in the United States, supporting domestic manufacturing and American jobs.

Available for Tax Years 2025-2028

This applies to interest paid during tax years 2025 through 2028 on qualifying new auto loans originated after December 31, 2024.

Who Is Eligible?

To qualify for this federal tax benefit, you must meet these criteria:

  • The vehicle must be purchased new (not leased or used).
  • The loan must be incurred after December 31, 2024 and secured by a lien on the vehicle.
  • The vehicle must be for personal use (no business/fleet purchases).
  • You must include the vehicle's VIN on your tax return to claim the deduction.
  • If a qualifying auto loan is refinanced, the deductible interest generally still qualifies.
  • Under IRS rules, the deduction is an above-the-line deduction, so you can claim it even if you don't itemize your tax return.

Which Vehicles May Qualify?

Qualifying Vehicles Must:

  • Be a car, minivan, van, SUV, pickup truck, or motorcycle.
  • Have a gross vehicle weight rating (GVWR) of less than 14,000 lbs.
  • Have undergone final assembly in the United States.
  • Used vehicles and leased vehicles do NOT qualify for this deduction.

🚩 Final assembly in the United States is the key requirement - even some foreign-brand vehicles assembled here may qualify.

Verify final assembly by checking the VIN with the official NHTSA VIN Decoder, and consult your tax advisor for guidance.

NHTSA VIN Decoder

Apply For Financing

Income-Based Deduction Limits

Filing Status Deduction Chart

3-column summary of income limits and maximum deduction amounts.

Filing Status
Income Range
Maximum Deduction
Single
≤ $100,000
Up to $10,000
Married Filing Jointly
≤ $200,000
Up to $10,000
Single
$100,001 - $149,000
Partial (phase-out)
Married Filing Jointly
$200,001 - $249,000
Partial (phase-out)
All filers above these ranges
> $149,000 (single) / $249,000 (joint)
No deduction

Note: The deduction phases out by roughly $200 for every $1,000 over the threshold. Phase-out figures are approximate; actual IRS forms and guidance will specify the exact reduction steps.

See New Vehicles that may qualify for the Auto Loan Interest Deduction. Eligibility must be determined on a vehicle-by-vehicle basis using the VIN and IRS requirements, don't forget to Check Your VIN Eligibility.