New $10,000 Car Loan Interest Deduction for U.S.-Assembled Vehicles

A new federal tax deduction lets qualifying buyers deduct up to $10,000 per year in interest paid on loans for new vehicles assembled in the United States - effective January 1, 2025 through December 31, 2028.

The deduction replaces the expired $7,500 EV credit but applies broadly: cars, SUVs, pickups, minivans, vans, and motorcycles under 14,000 lbs GVWR qualify - if newly purchased (not leased), used primarily for personal use, and assembled in the U.S.

Eligibility is income-based: single filers earning ≤$100,000 and married couples ≤$200,000 in modified adjusted gross income. The deduction phases out by $200 per $1,000 above those thresholds.

To verify U.S. assembly, check the VIN - numbers beginning with 1, 4, or 5 indicate domestic final assembly - or review the Monroney sticker. The IRS requires the VIN on Schedule 1-A to claim the deduction.

Cars.com’s American-Made Index identifies qualifying models including the Tesla Model Y, Ford F-150, Lincoln Aviator, Chevrolet Corvette, Honda Passport, Jeep Gladiator, Dodge Durango, Volkswagen ID.4, Toyota Corolla Cross, and Acura MDX.

Experts estimate typical annual tax savings range from $300 to $900 - depending on loan size, interest rate, and tax bracket. Buyers must weigh this against other incentives, vehicle value, and financing terms.