When President Trump signed the One Big Beautiful Bill Act on July 4, 2025, he delivered on a campaign promise that puts money back in the pockets of car buyers—but only some of them.
The new law creates a sweet deal for middle-class Americans buying new cars. Starting in 2025 and running through 2028, qualified buyers can deduct up to $10,000 annually in car loan interest from their taxes. Think of it as Uncle Sam helping with your monthly payment—no need to itemize deductions or jump through complicated hoops.
But here’s where it gets interesting. Not everyone gets invited to this party. The car must be brand new and assembled in America, meaning the vehicle identification number starts with 1, 4, or 5. Sorry, used car shoppers—you’re out of luck. The same goes for anyone eyeing that sleek German sedan or Japanese hybrid built overseas.
Income matters too, and the government draws some clear lines. Single people earning over $100,000 or married couples making more than $200,000 start losing benefits. For every $1,000 over these limits, the deduction shrinks by $200. Hit $150,000 as a single filer or $250,000 filing jointly, and the benefit disappears completely.
The rules get pickier from there. Only personal vehicles count—no work trucks or business fleets. Leasing doesn’t qualify either; you need an actual loan secured by the car. The loan must start after December 31, 2024, and borrowing from family members won’t work. Buyers must include the VIN on their tax returns when claiming the deduction.
Middle-class families buying pickup trucks, SUVs, cars, or even motorcycles under 14,000 pounds stand to benefit most. Someone paying $8,000 yearly in interest on their new American-made SUV could save real money come tax time. The vehicle must also fall under the maximum vehicle price of approximately $112,000 to qualify for the deduction. Buyers who qualify can position themselves to buy quality assets during potential market downturns when automaker incentives often increase.
The winners are clear: middle-income buyers choosing new domestic vehicles with traditional financing. The losers include used car buyers, high earners, foreign car enthusiasts, and anyone preferring to lease.
This temporary provision aims to boost American auto sales while rewarding specific buyer behaviors. Whether it achieves those goals remains to be seen, but qualifying buyers should enjoy the ride while it lasts.
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