President Donald Trump signed a bill on July 4, 2025, providing relief for new car buyers facing high prices and interest rates. Eligible buyers may deduct up to $10,000 annually in car loan interest on their federal tax returns. The deduction applies to new vehicles assembled at a U.S. plant, weighing below 14,000 pounds, suitable for public roads, and not salvaged. Various American-made car brands qualify, and local dealerships are already advertising the deduction. The deduction is available to both itemizers and standard deduction takers, with income limits for maximum savings.

To qualify for the auto loan interest deduction, your modified adjusted gross income (MAGI) must not exceed $200,000 for joint filers or $100,000 for other filers. Loans must be taken out after December 31, 2024, for personal vehicles used as collateral. Business vehicle financing may qualify for a separate business expense deduction. Potential tax savings depend on your tax bracket, interest paid, and MAGI. Extra savings may be available for vehicles eligible for the federal EV credit until September 2025. Details on reporting auto loan interest on tax returns will be provided closer to tax season.

Read more at Yahoo Finance: Are You Eligible for Trump’s Auto Loan Deduction? Here’s Who Qualifies