What OBBBA Changed
New Deduction: For tax years 2025–2028, individuals can deduct interest paid on a qualified passenger vehicle loan even if they take the standard deduction. This is an “above-the-line” deduction under IRC §163(h)(4).
Qualified Vehicle:
- Must be:
- New (not used)
- Purchased for personal use
- Final assembly in the United States
- Gross vehicle weight rating <14,000 lbs
- Types: car, minivan, SUV, pickup truck, van, or motorcycle.
Loan Requirements:
- Incurred after Dec 31, 2024
- Secured by a first lien on the vehicle
- From an unrelated lender (no family loans)
Income Limits:
Full benefit for AGI < $100,000 (single) or $200,000 (joint); phases out above these thresholds.
Deduction Cap:
Up to $10,000 per year in interest.
This information is for educational purposes only and should not be relied upon as tax or legal advice. Consumers seeking to discover whether their vehicle loan qualifies for the OBBBA interest deduction should seek advice from a qualified tax professional.
Take a look at the links below for additional information:
