IR-2025-129, Dec. 31, 2025
The Department of the Treasury and the Internal Revenue Service provided guidance on the “No Tax on Car Loan Interest” provision enacted under the OBBB.
The proposed regulations relate to a new deduction for interest paid on vehicle loans incurred after Dec. 31, 2024, to purchase new made-in-America vehicles for personal use. This new tax benefit applies to both taxpayers who take the standard deduction and those who itemize deductions.
This guidance addresses important eligibility criteria, including:
– Providing rules relating to new vehicles eligible for the deduction, including for determining if the final assembly of a vehicle occurred in the United States;
– Providing rules for determining which vehicle loans qualify and the amount of interest paid on a loan that may be deductible;
– Providing rules for determining if a new vehicle is purchased for personal use; and
– Identifying taxpayers who can take the deduction and clarifying the $10,000 annual deduction limit.
If you have questions about this issue or other policy matters, please contact NCACPA Coordinator of Advocacy & Outreach Will Edmondson.