Latino Traffic Report has learned that tax payers in 2025 may be eligible to deduct up to $10,000 of interest paid on new car loans during the year.
In the December newsletter, AARP reports that for those who purchased a new (not used) car, minivan, SUV, pickup truck, or motorcycle, the deduction may apply but to qualify, the vehicle’s final assembly must have taken place in the United States, and it must weigh less than 14,000 pounds. (To find out where your car was assembled, enter the vehicle identification number into the National Highway Traffic Safety Administration’s VIN Decoder. The assembly location will be listed in the “Other Information” section).
The deduction is gradually phased out based on your Modified Adjusted Gross Income (MAGI). Once your MAGI surpasses $100,000 ($200,000 for joint filers), the deduction is reduced by $200 for every $1,000 (or portion thereof) over the applicable threshold. You’re no longer eligible for the deduction if you paid $10,000 in interest for the year and your MAGI is $150,000 or more ($250,000 or more for joint filers).
As with the new deduction for people 65 and older, you can claim the car loan interest deduction whether or not you itemize, but the deduction is available only for the 2025 through 2028 tax years.
Your lender is required to provide a statement to you by January 31, 2026, indicating the total amount of interest you paid on your auto loan in 2025. The vehicle must be purchased after December 31, 2024, and before January 1, 2029 and must be for personal, non-commercial use.