TLDR: A new car loan interest deduction in H.R. 1 allows up to $10,000 annually for U.S.-assembled vehicles purchased 2025-2028. Most buyers with average $43,000 loans will save roughly $500 in year one through reduced taxes, providing meaningful relief for middle-class buyers despite limitations that exclude imports and phase out benefits above $100k income.
A new federal tax deduction for auto loan interest became law on July 4th as part of H.R. 1. This provision allows qualified buyers to deduct interest paid on loans for American-made vehicles, potentially saving hundreds or thousands of dollars on their tax bills.
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