A recent tax bill passed by the Senate and Congress includes a deduction for interest paid on loans for vehicles assembled in the USA. This deduction, part of the "One Big Beautiful Bill," allows taxpayers to potentially write off up to $10,000 in interest annually for loans taken out for cars, trucks, SUVs and EVs with final assembly in the United States. The deduction is intended to incentivize domestic vehicle purchases and is available for tax years 2025 through 2028.
Here's a more detailed breakdown:
What it is:
The legislation provides a tax deduction for interest paid on loans for vehicles assembled in the U.S.
Eligible Vehicles:
GMC Canyon, Sierra 1500, Sierra HD, Acadia and Yukon
Who Benefits:
The deduction is available for individual retail customers, but there are income limitations. For single taxpayers, the deduction begins to phase out for modified adjusted gross income (MAGI) exceeding $100,000, and for married couples filing jointly, it phases out above $200,000 in MAGI.
Timing:
The deduction applies to loans taken out for vehicles with final assembly in the U.S. after December 31, 2024, and only for interest paid in tax years 2025 through 2028.
Loan Type:
The deduction is for individual financing, not for commercial or fleet purchases.
How it Works:
The deduction is considered "above-the-line," meaning it can be taken whether or not, a taxpayer itemizes deductions but please consult your tax adviser.
Potential Savings:
For the average new-vehicle loan, the deduction could save taxpayers between $275 and $605 annually, depending on their tax bracket, but please consult your tax adviser. .
Final Assembly:
The vehicle's "final assembly" location in the U.S. is a key factor in determining eligibility for the deduction
Reporting:
Loan providers will be required to provide tax reporting forms to purchasers, including the vehicle identification number (VIN), to help verify eligibility.
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