economy
February 13, 2026
Interest on new car loans is now tax deductible up to $10,000—here's how much buyers may actually save
A new tax break offers deductions of up to $10,000, but income limits and loan rules mean most buyers will see much smaller savings.
TL;DR
- A new U.S. tax provision allows eligible taxpayers to deduct up to $10,000 in interest on newly purchased vehicle loans for tax years 2025-2028.
- The deduction is limited to loans for new vehicles (not used), personally used, and finally assembled in the United States, with final assembly in the U.S. being a key requirement.
- Income limitations apply, with phaseouts beginning at $100,000 for single filers and $200,000 for married couples filing jointly.
- Most borrowers will not reach the $10,000 interest threshold in a single year, leading to tax savings likely measured in hundreds of dollars rather than thousands.
- To claim the deduction, taxpayers need the vehicle's VIN and must obtain a statement from their lender detailing the interest paid on qualifying loans.
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