The Treasury Department is implementing President Donald Trump’s “No Tax on Car Loan Interest” policy, a move aimed at lowering costs for American families, Treasury Secretary Scott Bessent said Wednesday.
The policy, introduced as part of Trump’s “big, beautiful bill,” allows taxpayers to deduct up to $10,000 per year in auto loan interest on new U.S.-assembled vehicles purchased between 2025 and 2028.
“The Treasury Department is implementing President Trump’s No Tax on US Auto Loans, putting money back into the pockets of working and middle class families,” Bessent wrote on X.
“For new U.S.-assembled vehicles purchased in 2025-2028, eligible taxpayers can deduct up to $10,000 per year in auto loan interest, regardless of whether they itemize or use the standard deduction.”
THE “BIG, BEAUTIFUL BILL” INCLUDES AN INTEREST TAX DEDUCTION ON CAR LOAN. ARE YOU ELIGIBLE?
Treasury Secretary Scott Bessent said Wednesday he is implementing President Donald Trump’s no-tax policy on auto loans. (Eric Lee/Bloomberg via Getty Images/Getty Images)
Bessent said the Treasury Department and the IRS are rolling out clear guidance so taxpayers “know exactly how the deduction works.”
“For millions of Americans, a car is not a luxury, it’s the way you get to work, school and child care,” Bessent said. “This deduction helps reduce monthly costs and makes car ownership more affordable when families need it most.”
The tax credit only applies to vehicles that are assembled in the US and which Bessent says are intended to support American workers.
“The tax cut also supports American workers by applying only to U.S.-assembled vehicles, strengthening domestic manufacturing,” he said.
INTEREST DEDUCTION CAR LOAN IN ‘BIG, BEAUTIFUL BILL’
The tax credit only applies to vehicles assembled in the US (iStock / iStock)
The One Big Beautiful Bill Act, which was signed into law on July 4, includes several requirements for deducting interest on auto loans. It only applies to new cars, SUVs, vans, pickup trucks and motorcycles weighing less than 14,000 pounds. Used vehicles are not eligible.
To qualify, the vehicle must be purchased for personal use (not for business or commercial purposes) and final assembly must take place in the US.
Buyers must also be the original owner of the vehicle and the loan must be secured by a lien on it Kelley Blue Book.
AMERICANS WILL GET ‘HUGE’ TAX REFUND NEXT YEAR, SECRETARY OF THE TREASURY SAYS
The policy was introduced as part of Trump’s “big, beautiful bill.” (Yuri Gripas/Abaca/Bloomberg via Getty Images/Getty Images)
The deduction shrinks for higher earners and is phased out for individuals earning more than $100,000 per year and joint filers earning more than $200,000.
The IRS has not yet released an official list of eligible vehicles and models.
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“I will make auto loan interest fully tax deductible,” Trump said at a campaign rally in North Carolina in October 2024, according to Reuters.
“I’m only going to do it if they build that specific product – namely a car – in the United States.”
