Republicans push tax break on car loan interest, but only 1% of loans will qualify.

From CNBC: 2025-06-24 05:30:00

Republicans are pushing a tax break on car loan interest, but economists say most households won’t benefit. Only 1% of new auto loans exceed $112,000, the threshold for the full $10,000 deduction. The tax break, part of the “One Big Beautiful Bill Act,” applies to vehicles assembled in the U.S.

The House passed the bill, but experts doubt many will claim the full benefit. Individuals earning over $100,000 (or $200,000 for couples) see reduced benefits, with no benefit once income exceeds $150,000. On average, a car loan in 2025 is $43,000, giving buyers a $3,000 deduction in the first year.

Monthly payments will see minimal reduction, with the average buyer likely getting less than $500 in year one. This tax break will have limited impact on most households, as only a small percentage of loans are large enough to qualify for the full deduction.

Read more: How to get full ‘big beautiful’ bill car loan interest tax break