What is this program?

The One, Big, Beautiful Bill created a temporary tax deduction that can let you deduct auto loan interest up to $10,000 per year on certain new, U.S.-assembled vehicles bought for personal use.

This new provision is commonly described as “No Tax on Car Loan Interest.” Under Treasury and IRS guidance, it applies to interest paid on a qualifying vehicle loan used to purchase a new made-in-America vehicle for personal use. It’s also designed to work whether you itemize deductions or take the standard deduction. That detail matters because most households don’t itemize.

How does it work?

Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. (Lease payments do not qualify.)

Customers can deduct up to $10,000 in annual interest per tax return, not per person or per vehicle.

Deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).

Who Qualifies and for which vehicles?

The “must-have” rules:

• New vehicle only (used vehicles don’t qualify).
• Final assembly in the U.S.
• Personal use only (non-commercial).
• Gross Vehicle Weight Rating (GVWR) under 14,000 pounds.
• Financed with a standard auto loan from a qualified lender (not a lease).
• Purchased within the window: Jan. 1, 2025 through Dec. 31, 2028.

With final assembly occurring in Chattanooga, TN, the Volkswagen Atlas, Atlas Cross Sport, and select model year ID.4₂ qualify for the tax deduction.