From the Internal Revenue Service, December 31, 2025:
WASHINGTON — The Department of the Treasury and the Internal Revenue Service today provided guidance on the “No Tax on Car Loan Interest” provision enacted under the One, Big, Beautiful Bill.
The proposed regulations issued today relate to a new deduction for interest paid on vehicle loans incurred after Dec. 31, 2024, to purchase new made-in-America vehicles for personal use. This new tax benefit applies to both taxpayers who take the standard deduction and those who itemize deductions.
Who can take a deduction for interest on car loans
To help taxpayers take advantage of this new tax benefit, today’s guidance addresses important eligibility criteria, including:
- Providing rules relating to new vehicles eligible for the deduction, including for determining if the final assembly of a vehicle occurred in the United States;
- Providing rules for determining which vehicle loans qualify and the amount of interest paid on a loan that may be deductible;
- Providing rules for determining if a new vehicle is purchased for personal use; and
- Identifying taxpayers who can take the deduction and clarifying the $10,000 annual deduction limit.
What lenders need to know...
....MUCH MORE
Here's the Treasury Secretary, January 7:
Treasury is implementing President Trump’s No Tax on American Car Loan Interest, putting money back in the pockets of working and middle-class families. For new U.S.-assembled vehicles purchased in 2025-2028, eligible taxpayers can deduct up to $10,000 per year in auto loan… pic.twitter.com/jO0kNNCNOd
— Treasury Secretary Scott Bessent (@SecScottBessent) January 7, 2026
