Save THOUSANDS on your next car with the One Big Beautiful Bill Act

The One Big Beautiful Bill Act is looking especially attractive for car buyers.

For the first time in decades, taxpayers can deduct up to $10,000 in auto loan interest for new vehicles assembled in the United States. Welcome relief after being stretched thin by high borrowing costs and inflation.

A family financing a $40,000 SUV can save several hundred dollars in the first year, depending on their tax bracket.

Bonus: It helps strengthen American manufacturing.

Above the line

Unlike most tax deductions, this one is above the line, which means taxpayers can claim it without itemizing. That simplicity makes it available to millions of middle-class Americans.

To qualify, buyers must purchase a new personal-use vehicle. Cars, SUVs, pickup trucks, vans, or motorcycles under 14,000 pounds qualify, but the final assembly has to be completed in the United States. This is a direct remedy for the skewed global competition and supply chain pressures that have been hurting many car companies that build in the USA.

The law requires lenders to issue a new IRS form, the 1098-Q, reporting interest paid on qualifying loans. Borrowers will also need to provide their vehicle identification number on their tax return to confirm eligibility. If a loan is refinanced, the deduction typically still applies, provided the vehicle meets the original requirements. These safeguards give taxpayers the benefit of American-assembled vehicles. And I’ll leave a list of all the vehicles that should qualify below.

The deduction is targeted at middle-income car buyers. For single filers, it begins phasing out at $100,000 in income and is fully eliminated at $150,000. For couples, the phase-out starts at $200,000 and ends at $250,000. That structure puts the greatest benefit in the hands of households struggling most with high interest rates. With the average new car loan now topping $42,000 at more than 7% APR, first-year interest charges alone can reach $1,600 or more. For those families, the deduction can provide a meaningful tax refund without pushing them anywhere near the $10,000 cap.

Crucial savings

Dealerships have wasted no time highlighting this change. Sales teams are using the tax break as a tool to overcome sticker shock. A family financing a $40,000 SUV can save several hundred dollars in the first year, depending on their tax bracket.

For buyers weighing whether to purchase now or wait, that savings often makes the decision. This could especially benefit dealerships unloading mid-range U.S.-built vehicles like Ford, Chevrolet, and Tesla’s American-assembled models.

By designing loans to capture the greatest benefit from the law, dealerships also get to emphasize their role in saving the buyer money — a way to build trust at a time when consumers are increasingly cautious about debt.

The One Big Beautiful Bill Act also includes other provisions, such as restoring 100% bonus depreciation for qualified business property through 2028. This helps small-business owners and independent contractors (like rideshare drivers) who can now deduct vehicle interest while expensing their assets. It also helps dealerships manage inventory more efficiently.

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EV rider

One of the most consequential changes, however, is the phase-out of federal electric vehicle tax credits. As of September 30, 2025, the long-standing subsidies that handed buyers $7,500 for new EVs and $4,000 for used EVs will be gone. For years, EV sales have been artificially boosted by taxpayer-funded incentives. That era is ending. Buyers who want an EV will now need to evaluate them on real-world value, just like gas-powered vehicles. U.S.-assembled EVs will still qualify for the auto loan interest deduction, but the days of federal handouts at the point of sale are coming to a quick end.

This change creates urgency. Dealers are moving EV inventory quickly before credits expire, while at the same time promoting the deduction for all qualifying vehicles. For buyers, the message is clear: If you want a subsidized EV, act quickly. If you want lasting tax savings, look to U.S.-assembled cars, trucks, or SUVs under the new deduction.

Because the auto loan deduction sunsets after 2028, buyers and dealers are preparing for a surge in purchases over the next two years. The goal is to drive a temporary spikes in auto sales; this incentive will create a wave of demand for a short period of time. The difference this time is that the benefit is tied to supporting American factories and workers, not just moving inventory off lots.

Straightforward steps

For buyers, the steps are straightforward. Confirm that your vehicle is new, assembled in the U.S., and purchased after December 31, 2024. Check income limits, work with your lender to ensure proper reporting, and keep the VIN on hand for tax filing. With interest rates high and the average new vehicle price pushing past $48,000, the potential savings are substantial. Over the course of a multiyear loan, some buyers could save thousands of dollars in taxes while keeping more of their household budget intact.

The law’s auto loan deduction is more than a line in the tax code. It rewards those who buy American, gives relief to the middle class, and reduces reliance on subsidies that distort the marketplace. For car buyers balancing inflation, high interest rates, and everyday expenses, it delivers something rare in Washington: practical help that makes life a little easier.

These cars meet the requirements for the One Big Beautiful Bill Act loan deduction.

Acura: Integra, MDX, RDX, TLX, ZDX
BMW: X3, X4, X5, X6, X7, XM
Buick: Enclave, Encore GX, Envista
Cadillac: Celestiq, CT4, CT5, Escalade, Escalade IQ, Lyriq, Vistiq, XT4, XT5, XT6
Chevrolet: Colorado, Corvette, Express, Malibu, Silverado 1500, Silverado 2500, Silverado EV, Suburban, Tahoe, Traverse
Dodge: Durango
Ford: Bronco, Escape, Expedition, Explorer, F-150, F-150 Lightning, Mustang, Ranger
Genesis: GV70, GV80
GMC: Acadia, Canyon, Hummer EV SUT, Hummer EV SUV, Savana, Sierra 1500, Sierra 2500, Yukon, Yukon XL
Honda: Accord, Civic, CR-V, Odyssey, Pilot, Ridgeline
Hyundai: Santa Cruz, Santa Fe, Tucson, Ioniq 5, Ioniq 9
Jeep: Gladiator, Grand Cherokee, Wagoneer, Grand Wagoneer, Wrangler
Kia: EV6, EV9, Sorento, Telluride
Lincoln: Aviator, Corsair, Navigator
Lucid: Air, Gravity
Mazda: CX-50
Mercedes-Benz: EQE SUV, EQS SUV, GLE, GLS, Sprinter 2500, Sprinter 3500
Nissan: Altima, Frontier, Pathfinder, Rogue, LEAF
Polestar 3
Rivian: R1S, R1T
Subaru: Ascent, Impreza, Legacy, Outback
Tesla: Cybertruck, Model 3, Model Y, Model S, Model X
Toyota: bZ4X, Camry, Corolla, Corolla Cross, Grand Highlander, Highlander, Sequoia, Sienna, Tundra
Volkswagen: Atlas, Atlas Cross Sport, ID.4
Volvo: EX90, S60
Heavy-Duty Vehicles (8,501–13,999 lbs GVWR)
Ford: Super Duty F-250, Super Duty F-350 (SRW configurations), Transit 350 HD
Chevrolet: Express 3500, Silverado 3500HD (select configurations under 14,000 lbs)
GMC: Savana 3500, Sierra 3500HD (select configurations under 14,000 lbs)