Summary
The IRS has announced a new tax deduction policy that benefits U.S. citizens who take out loans to buy new American-made cars for personal use. This policy change is a result of a law signed by President Donald Trump and begins with loans taken out after December 31, 2024. It allows eligible taxpayers to deduct up to $10,000 annually in car loan interest, but has specific requirements and exclusions.
Key Facts
- This new tax deduction applies to interest on loans for new, U.S.-assembled vehicles bought for personal use.
- Loans must be taken out after December 31, 2024, to qualify for the deduction.
- Taxpayers can deduct up to $10,000 each year in interest on qualifying vehicle loans.
- Vehicles that are used, leased, or purchased for business are not eligible.
- Taxpayers can claim the deduction whether they itemize or take the standard deduction.
- The estimated cost of this provision is $31 billion over the next ten years.
- Lower-income households, likely to buy used cars, may not benefit from this deduction.
- The public can comment on the new regulations until February 2, and the IRS will finalize the tax season start date in January 2026.
