A temporary federal income tax deduction for interest on qualifying auto loans for 2025 through 2028 was created by the One Big Beautiful Bill Act. The write-off, available even if you don’t itemize, is capped at $10,000 per tax return, subject to income-based phaseouts. It applies only to interest on first-lien loans to buy new, U.S.-assembled passenger vehicles for personal use. Leased, used and fleet vehicles are excluded. The IRS recently issued proposed regulations that clarify how the deduction works. For example, they state that collision and liability insurance premiums, as well as negative equity, are excluded. The regs also address the “personal use” requirement. Contact us for details.
