"Taxpayers who bought a new car in 2025 can, in some cases, deduct interest on their auto loan. The deduction was created by the One Big Beautiful Bill Act, which also removed taxes on tips and overtime for qualifying workers, and relevant to new car shoppers eliminated a tax credit for buying electric vehicles."
"The deduction phases out for single tax filers with a modified adjusted gross income, or MAGI, of $100,000 or more. The phaseout begins at $200,000 for a married couple filing jointly. If you make six figures, you may still be able to benefit. MAGI is calculated after certain deductions from your gross income, like tax-deductible retirement contributions."
"To get the deduction, a vehicle must have gone through its final assembly process in the United States, which you can determine using your vehicle identification number. Mark Gallegos, a tax partner at Porte Brown Wealth Management in Chicago, says he's had to remind clients that buying a vehicle 'made in the U.S.' is not the same as simply buying an 'American' brand."
The One Big Beautiful Bill Act introduced a tax deduction for auto loan interest on new vehicles purchased after December 31, 2024. The deduction phases out for single filers with modified adjusted gross income of $100,000 or more, and for married couples filing jointly at $200,000. Used car purchases do not qualify, nor do vehicles assembled outside the United States. The vehicle's final assembly location can be verified using the vehicle identification number. This provision eliminates benefits for used vehicle buyers with poor credit, who typically face the highest interest burdens. The deduction is calculated gradually, allowing partial deductions for those near income thresholds.
Read at www.npr.org
Unable to calculate read time
Collection
[
|
...
]