A MAJOR tax change could save car buyers up to $10,000 a year – but only if they meet six specific conditions.
The benefit comes from a sweeping tax cut and spending law signed last week by President Donald Trump.
Trump’s “Big, Beautiful Bill” includes a new deduction for interest on loans used to buy eligible vehicles in the US.
The savings apply only to new cars, and only if they’re made in America.
Buyers can write off up to $10,000 per year in interest costs, a big deal, especially with current auto loan rates hovering above 6%.
To qualify, the vehicle must be purchased between 2025 and 2028.
It also must weigh under 14,000 pounds and be used only for personal, not business, purposes.
Only brand-new vehicles are eligible; used cars don’t count under the final law.
There’s also an income cap.
Single filers making $100,000 or less and joint filers making up to $200,000 can claim the full deduction, Spectrum News reported.
Above those income levels, the benefit drops by $200 for every extra $1,000 earned.
That means higher earners will see less – or none – of the deduction.
There is no official list yet of which vehicles qualify, but the rule requires final assembly in the US.
That means foreign cars won’t count, and even some domestic brands assembled overseas could miss the mark.
Senator Bernie Moreno, a Republican from Ohio, who helped push the law through the Senate, said the goal is to boost US manufacturing.
“We want people driving new cars,” Moreno said.
“This means your fleet is younger. It’s safer. It’s better for the environment.”
Representative Dave Taylor, Republican, from Ohio, who introduced the original House version, said the Senate narrowed the bill.
“It started out with including new and used cars,” he said.
“That’s important for my district because it’s one of the poorest districts in Ohio.”
Taylor said the change limits the help for people who tend to buy used vehicles, about 75% of all buyers.
“Hopefully, that’s a change we can make down the road,” he added.
“But for now, it’s a great step forward.”
WHAT ABOUT POOR PEOPLE?
The law may not help lower-income buyers as much as expected, since 80% of cars under $30,000 are imported and won’t qualify.
Still, for those eligible, the deduction could cut deep into interest payments.
Data from Kelley Blue Book put the average new car price at $47,962 in March 2025.
Experian said the average new car loan rate was 6.73%, which adds up to over $8,600 in interest across five years.
That’s about $144 a month – money buyers could now write off, if they check all six boxes.
Moreno said the change would also help phase out the Biden-era $7,500 tax break on electric vehicles.
“We’re giving relief to working families, working Americans,” he said.
“That equals, by the way, almost an exact $7,500.”
But not everyone agrees it will offset price hikes triggered by rising tariffs.
Source : https://www.the-sun.com/motors/14720880/new-tax-law-ev-car-loan-deductions/