loader image
Saturday, October 18, 2025
95.9 F
McAllen
- Advertisement -

One Big Beautiful Bill Lets You Deduct Car Loan Interest—$10,000 per Year

New Auto Loan Interest Deduction Lives from 2025 to 2028 under OBBB

Translate to Spanish or other 102 languages!

The “One Big Beautiful Bill” Act (officially Public Law 119‑21) was signed into law on July 4, 2025. One of its new provisions allows individuals to deduct interest paid on certain car loans. This deduction is effective for tax years 2025 through 2028, meaning it starts January 1, 2025, and ends December 31, 2028. Image for illustration purposes
The “One Big Beautiful Bill” Act (officially Public Law 119‑21) was signed into law on July 4, 2025. One of its new provisions allows individuals to deduct interest paid on certain car loans. This deduction is effective for tax years 2025 through 2028, meaning it starts January 1, 2025, and ends December 31, 2028. Image for illustration purposes
- Advertisement -

Texas Border Business / Mega Doctor News

The “One Big Beautiful Bill” Act (officially Public Law 119‑21) was signed into law on July 4, 2025. One of its new provisions allows individuals to deduct interest paid on certain car loans. This deduction is effective for tax years 2025 through 2028, meaning it starts January 1, 2025, and ends December 31, 2028. 

Under the law, taxpayers may take an above-the-line deduction of up to $10,000 per year for interest paid on a loan used to buy a qualifying passenger vehicle for personal use. This means the deduction is available even if you claim the standard deduction and do not itemize. 

- Advertisement -

To qualify, the vehicle must meet specific criteria:

• The loan must originate after December 31, 2024.

• The vehicle must be new, meaning its original use must begin with the taxpayer—used vehicles do not qualify.

• It must be for personal, non-business use.

- Advertisement -

• A lien must secure the vehicle.

• The vehicle must be assembled in the United States. Eligible types include cars, minivans, vans, SUVs, pickup trucks, and motorcycles, with a gross vehicle weight under 14,000 pounds.

The deduction phases out for individuals with modified adjusted gross income (MAGI) over $100,000, and for joint filers over $200,000. Higher-income taxpayers will see a reduced deduction. 

If you refinance a qualifying vehicle loan, interest on the refinanced portion generally remains eligible for the deduction. 

From a practical standpoint, this can offer real savings—especially for those paying significant interest. For example, a $40,000 car loan at a 5 percent interest rate would cost about $2,000 in interest during its first year; taking the deduction could lower your taxable income by that amount. While few taxpayers will reach the full $10,000 cap—due to the average car price—the deduction can still provide meaningful relief.

To claim the deduction, it’s important to confirm eligibility:

• Check the vehicle’s Monroney sticker or use the VIN to verify if final assembly occurred in the U.S.  

• Keep documentation of the loan’s origination date, interest paid, and proof of lien.

• Watch for IRS forms and guidance—banks or credit unions may need to report interest for qualifying loans. 

The law’s temporary nature makes timing critical. The provision is available only through the end of 2028, so auto buyers looking to benefit may wish to plan accordingly.

In sum, the One Big Beautiful Bill creates a new, temporary tax break for personal car buyers: up to $10,000 of loan interest can now be deducted each year from 2025 to 2028—so long as the loan and vehicle meet eligibility requirements. It’s a simple, above-the-line deduction that offers modest but welcome savings during the life of the provision.

See related stories:

- Advertisement -
- Advertisement -

- Advertisement -

More Articles

The Human Bean’s “Coffee for a Cure” to Benefit The Renaissance Cancer Foundation, Oct. 17th

The Human Bean located at 1124 E. Nolana in McAllen is inviting coffee-lovers to "drink pink" on October 17 for their annual “Coffee for a Cure” breast cancer giveback event. All food and beverage proceeds on that day will benefit the Renaissance Cancer Foundation, marking The Human Bean’s largest fundraiser of the year.

2025 DHR Health Fashion Show & Gala Honoring Heroic Patients

The Edinburg Conference Center at Renaissance was filled with emotion, gratitude, and hope on Wednesday, October 15, 2025, as DHR Health hosted its 2025 Fashion Show & Gala Honoring Heroic Patients. The annual event celebrated breast cancer survivors and highlighted the importance of breast reconstruction awareness, education, and innovation in women’s health care.

The Harmful Effects of Alcohol on the Brain

Millions of people drink alcohol, and while many may know the harm it can cause to their liver, some may be surprised to know it can be just as damaging to the brain.

STC’s Chapa Turns Curiosity into Purpose

At just 19-years-old, STC Psychological Science student Gianna Chapa has already built a foundation for her future that reflects both determination and heart.
- Advertisement -
×