The IRS has issued final regulations on the car loan interest deduction. For loans taken out after Dec. 31, 2024, on new, U.S.-assembled vehicles used primarily for personal use, eligible taxpayers may be able to deduct up to $10,000 in interest annually (through 2028), whether they itemize or claim the standard deduction. The deduction begins to phase out when modified adjusted gross income exceeds $100,000 ($200,000 for joint filers). Used and leased vehicles don’t qualify. Among other things, the final regs clarify the personal-use test. The test is applied only when the loan is taken out. The regs also clarify what can be included in the financed amount. Contact us for more details.
