New Vehicle Interest Deduction for 2025
Beginning with the 2025 tax year, some taxpayers may qualify for a new auto loan interest deduction.
If you purchase a qualified personal-use vehicle assembled in the United States, you may be eligible to deduct up to $10,000 per year in interest paid on that auto loan, even if you do not itemize your deductions.
This deduction:
- Is claimed on the front of the tax return
- Does not require long-form itemization
- Applies to interest paid, not the vehicle purchase price
- Is subject to income limits and eligibility requirements
To claim this deduction, proper documentation is required, including the bill of sale, vehicle identification number (VIN), and auto loan interest details.
Who likely qualifies?
- Personal-use vehicles assembled in the U.S. and purchased in 2025 or later
- Loans with clear interest breakout on monthly statements
- Taxpayers under the income thresholds (phase-outs expected; final IRS guidance pending)
Documentation to keep
- Purchase agreement showing VIN, assembly location, and financed amount
- Monthly lender statements with interest portion highlighted
- Proof the vehicle is primarily personal (not already deducted on Schedule C)
If you are planning to purchase a vehicle or have recently purchased one, this deduction may help reduce your taxable income. For questions about eligibility or required documentation, contact Haynes Business Services for assistance.
Need help with this update?
Call (706) 677-2700 or send your documents securely.