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2025 Tax Tip: No tax on car loan interest – for loans on NEW made-in-America vehicles
Disclaimer: This article provides general information on the potential tax deduction available to individuals who financed NEW, made-in-America vehicles after December 31, 2024. This article is not tax advice. Please consult with your tax professional to confirm whether you qualify to claim this new deduction.
Tax changes for tax years 2025-2028 may allow individuals who financed a NEW made-in-America vehicle after 12/31/24 to deduct up to $10,000 of interest paid on their loan. Generally speaking, a qualified passenger vehicle is:
A car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds, that has undergone final assembly in the United States. (Not sure if your vehicle's final assembly was in the US? Grab your VIN and visit https://vpic.nhtsa.dot.gov/decoder/ . The "Plant Information" will tell you whether final assembly occurred in the US.)
A vehicle used for PERSONAL use
For amounts financed EXCLUDING negative equity from a trade-in rolled into the purchase deal at the dealership
In future years you will receive a new tax statement from your credit union that you can use if you qualify to deduct this interest. For 2025, however, you'll need your December 31, 2025 statement to get your year-to-date interest paid for use when assembling your taxes. INCOME LIMITS MAY APPLY. Consult your tax advisor for additional information on whether you qualify to claim this deduction.