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New Vehicle Loan Interest Deduction

Understanding the provision of the "No tax on auto loan interest" in the one big beautiful bill act

On July 4, 2025, the One Big Beautiful Bill was signed into law, introducing a tax benefit under Section 70203 -- No Tax on Car Loan Interest.

Eligibility Requirements:

  • Vehicle was purchased on or after January 1, 2025.
  • Loan must be incurred after December 31, 2024 and the loan must be secured by a lien on the vehicle.
  • The interest must be paid on a new passenger vehicle loan (used vehicles do not qualify).
  • The vehicle must be purchased for personal use (non-business).
  • Borrowers must include the Vehicle Identification Number (VIN) when claiming the deduction.

Qualifying Vehicles:

  • Cars, vans, SUVs, pickup trucks, and motorcycles.
  • Must be assembled in the United States (VIN Lookup).
  • Must have a gross vehicle weight rating under 14,000 pounds.

What does the provision provide?

Tax Deduction: Taxpayers may be able to deduct qualified auto loan interest paid of up to $10,000 on a qualifying auto loan from their taxable income each year for tax years 2025 through 2028.

Where is the interest paid information located?

The total interest paid year-to-date for qualifying vehicles is found on the December 31 Credit Union statement.