November 24, 2025, 11:00 AM
2025 Tax News, One Big Beautiful Bill Act
Effective for tax years 2025 through 2028, the "One, Big, Beautiful Bill Act," signed into law in July 2025, allows individuals to deduct up to $10,000 of interest paid on a loan used to purchase a qualified vehicle intended for personal use.
Key details
- Maximum annual deduction is $10,000
- The deduction starts to be reduced if your modified adjusted gross income exceeds $100,000 or $200,000 for single and joint filers, respectively.
- To qualify, the interest must be related to a loan:
- that was dated after December 31, 2024,
- used to purchase a new vehicle (used vehicles do not qualify),
- for personal use (not for business or commercial use), and
- that is secured by the vehicle's title.
- Also, to qualify the vehicle must be a car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds, and that has undergone final assembly in the United States.
To determine if your vehicle had final assembly in the U.S., check the vehicle information label attached to the vehicle on the dealer's lot or the National Highway Traffic Safety Administration VIN Decoder website. - The deduction is allowed whether you itemize deductions or take the standard deduction.
- The vehicle identification number ("VIN") must be entered on the return to receive the deduction.
- Lenders will be required to issue Form 1098-VLI for tax years 2026 through 2028. Transition rules for 2025 will allow taxpayers to use loan statements or other records to determine qualified interest paid.
