{"id":1583,"date":"2025-07-26T04:59:41","date_gmt":"2025-07-26T04:59:41","guid":{"rendered":"https:\/\/ft365.org\/index.php\/2025\/07\/26\/trumps-new-car-loan-interest-deduction-heres-how-to-qualify-for-a-tax-break-bankrate\/"},"modified":"2025-07-26T04:59:41","modified_gmt":"2025-07-26T04:59:41","slug":"trumps-new-car-loan-interest-deduction-heres-how-to-qualify-for-a-tax-break-bankrate","status":"publish","type":"post","link":"http:\/\/ft365.org\/index.php\/2025\/07\/26\/trumps-new-car-loan-interest-deduction-heres-how-to-qualify-for-a-tax-break-bankrate\/","title":{"rendered":"Trump’s New Car Loan Interest Deduction \u2014 Here’s How To Qualify For A Tax Break | Bankrate"},"content":{"rendered":"
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Car buyers may now benefit from a new tax break that allows them to deduct up to $10,000 in auto loan interest each year from their federal income taxes \u2014 reducing their taxable income.<\/p>\n

The provision, which is in effect for new cars purchased from 2025 through 2028, is part of the \u201cbig beautiful bill\u201d legislation signed into law by President Donald Trump on July 4. The bill included several new tax breaks, both permanent and temporary, and extended certain provisions of the 2017 Tax Cuts and Jobs Act (TCJA).<\/p>\n

Although the maximum deduction is set at $10,000 annually, most auto loans don\u2019t accrue that much interest.<\/p>\n

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Unless you plan on buying a brand-new luxury vehicle within the next three years, you won\u2019t see the full benefit of this deduction.<\/p>\n

\u2014 Kellye Guinan<\/cite> auto loans editor at Bankrate<\/span> <\/p><\/blockquote>\n

Plus, there are some strict limitations on what qualifies for the tax break and how long it lasts.<\/p>\n

Who qualifies for the new auto loan tax break?<\/h2>\n

Unlike some tax deductions, taxpayers can take advantage of the new car loan interest deduction whether they itemize or take the standard deduction.<\/p>\n

But this tax break is available only for a limited time \u2014 it applies to qualified purchases made from 2025 through 2028 \u2014 and it has income-based limits.<\/p>\n

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  • Single filers with a modified adjusted gross income (MAGI) of $100,000 or less qualify for the full deduction.<\/li>\n
  • Married couples filing jointly must have MAGI of $200,000 or less.<\/li>\n<\/ul>\n

    The deduction begins to phase out by $200 for every $1,000 over these limits and disappears entirely beyond certain thresholds.<\/p>\n

    Still, lower-income households may not see a significant benefit.<\/p>\n

    Because deductions are \u201cbased on your tax rate, households in lower brackets will save less,\u201d says Lisa Greene-Lewis, a CPA and tax expert with Turbo Tax. <\/p>\n

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    Someone who pays $1,200 in auto loan interest and is in the 10 percent tax bracket would save just $120.<\/p>\n

    \u2014 Lisa Greene-Lewis<\/cite> CPA and tax expert with Turbo Tax<\/span> <\/p><\/blockquote>\n

    What vehicles qualify for the car loan deduction?<\/h2>\n

    To be eligible, vehicles must meet the following criteria:<\/p>\n