FAQs: One Big Beautiful Bill Tax Interest Deduction on New Vehicles
Navigating the new One Big Beautiful Bill tax benefits can feel overwhelming, especially when it comes to understanding how the Car Loan Interest Deduction applies to new vehicle purchases. To help make things easier, we've put together a simple FAQ that breaks down the key details-what qualifies, how much you can deduct, which vehicles may be eligible, and what timelines and requirements you should keep in mind. Use this guide as a starting point, and always consult your tax professional for personalized advice.
You can deduct up to $10,000 of qualified car loan interest per year.
The vehicle’s final assembly must have occurred in the United States. The following models may qualify, Silverado 1500, Silverado HD 2500 & 3500, Silverado EV, Tahoe, Suburban, Traverse, Colorado, Corvette, Malibu. Chevrolet vehicles with a VIN starting with 1, 4, or 5 generally qualify. Use the NHTSA VIN Decoder to verify eligibility. https://www.nhtsa.gov/vin-decoder
Yes. This benefit is often described as an above-the-line deduction, which may be available even if you take the Standard Deduction. Confirm eligibility with your tax professional.
The vehicle loan must be secured by a first lien on the vehicle. Leases do not qualify for the deduction.
The vehicle’s MSRP must be under $80,000 to qualify for the interest deduction.
Yes. Income limits may apply and could reduce or eliminate the benefit based on Modified Adjusted Gross Income (MAGI). Always consult your tax advisor.
Yes. The deduction is available for vehicles purchased after December 31, 2024 and before December 31, 2028.
TAX DEDUCTION DISCLOSURE: The "Car Loan Interest Deduction" is provided under the One Big Beautiful Bill Act (OBBBA) for tax years 2025 through 2028. To qualify, the vehicle must be (1) purchased NEW, (2) for personal use only, (3) have a GVWR under 14,000 lbs and (4) have "Final Assembly" in the United States as verified by the VIN. This deduction is subject to Modified Adjusted Gross Income (MAGI) limits: full deduction is available for single filers with MAGI up to $100,000 and joint filers up to $200,000. Benefits phase out completely at $150,000 (single) and $250,000 (joint). Maximum annual deduction is $10,000 in qualified interest. Middletown Chevrolet is not a tax advisory firm. Tax benefits depend on individual circumstances. Customers are strongly encouraged to consult with a qualified tax professional or CPA to determine their specific eligibility and potential savings.
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