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Donna Genie explains a new tax break: starting in 2025, you can deduct up to $10,000 a year in car loan interest if the vehicle was assembled in the US. The deduction is per tax return, not per car, and you'll need to document what you paid.
Donna Genie explains a new tax break: starting in 2025, you can deduct up to $10,000 a year in car loan interest if the vehicle was assembled in the US. The deduction is per tax return, not per car, and you'll need to document what you paid.
Did you know that starting in 2025, you might be able to write off part of the interest on your car loan, even if you're not using the car for business purposes? Yep. It's part of the new tax law called One Big Beautiful Bill Act. And for a lot of folks, this could mean more money back in your pocket when you file your taxes. So let's break it down. Under the old rules, car loan interest was only deductible if you used your vehicle for business or if you were self employed. But under the new tax law, that's changing. Beginning with 2025 tax year, individuals can now deduct up to $10,000 per year in interest paid on a car loan, as long as the vehicle meets one big requirement. It has to be assembled in the United States. So if you're financing a vehicle that was built in the United States, whether it's a Ford, a Chevy, a Tesla, or any other eligible mate, you, you could claim a deduction for the interest you're paying on that loan, even if you're just using the car for regular personal driving. Now, this deduction is per tax return, not per vehicle. So if you have two US Assembled vehicles in the household, you can still only deduct up to $10,000 in total car loan interest in each year. But you knew there had to be a catch, right? Here it is. You'll need to be able to document your interest payments clearly. So that means keeping a copy of your loan statement or annual interest summary from your lender. And keep in mind, this is a federal tax deduction, so your state rules might be different. For many Americans, this deduction could make a big difference, especially in a year where interest rates are higher and car loans are more expensive than ever. So if you're thinking about buying or financing a vehicle, check the window sticker or ask your dealer, was this car assembled in the United States? If it was, your interest might be tax deductible in 2025. And if you already own a qualifying vehicle, make sure you're keeping track of your interest payments. This is one of those tax breaks that's easy to miss if you're not looking for Sam.
