🚗 New Tax Break on Car Loan Interest: What’s in the One Big Beautiful Bill Act for Drivers?

If you're planning to finance a new car in the next few years, Section 70203 of the One Big Beautiful Bill Act could put real money back in your pocket — up to $10,000 per year, to be exact.

This little-known provision in the sweeping legislation makes interest on car loans tax-deductible for a limited time. It’s one of the few times personal auto loan interest is eligible for a tax break — and it could be a big deal for everyday drivers.

Let’s break down what this means and how to take advantage of it.

💰 What’s in Section 70203?

From 2025 through 2028, you can deduct interest paid on a car loan — up to $10,000 per year — as long as the vehicle meets certain requirements and is for personal use.

Unlike typical deductions for home mortgage or student loan interest, this one applies to your personal vehicle — a huge win for working- and middle-class Americans.

Best of all? You don’t have to itemize your taxes to qualify. Even those taking the standard deduction can claim it.

✅ Who’s Eligible?

To qualify under Section 70203:

• You must buy a new car, SUV, truck, van, or motorcycle after December 31, 2024

• The vehicle must be for personal (not business) use

• The loan must be secured by the vehicle — not a lease

• Final assembly of the vehicle must take place in the U.S.

• You must be the first owner

• You’ll need to include the VIN on your tax return

  
  

Even refinanced loans can qualify if they meet the same criteria and don’t exceed the original loan amount.

🚫 What Doesn’t Count?

You can’t deduct interest if:

• You’re buying for a fleet or commercial use

• The loan is for a salvage, scrap, or parts-only vehicle

• You’re leasing, not buying

• The loan comes from a family member or related business

• The vehicle was not assembled in the U.S.

  
  

💵 Income Caps to Know

If your income is on the higher side, the deduction gradually goes away.

• The deduction is reduced by $200 for every $1,000 your income exceeds $100,000 (or $200,000 for joint filers)

• It fully phases out at higher income levels

  
  

This makes it especially valuable for middle-income families.

🏁 Why Now?

This is part of a larger package of reforms in the One Big Beautiful Bill Act — a sweeping law aimed at helping American households afford essentials like transportation, housing, and energy.

But it’s temporary. The deduction is only available for four tax years — 2025, 2026, 2027, and 2028. After that, unless Congress extends it, this opportunity disappears.

🚘 Bottom Line

The government is giving you a way to cut your car loan costs and lower your taxes — but only if:

• You buy the right kind of vehicle

• You finance it after 2024

• You act before the end of 2028

  
  

It’s a smart time to start planning your next vehicle purchase — and keep a close eye on models that are assembled in the U.S.

🔧 Action Steps

• ✅ Plan vehicle purchases in or after 2025

• ✅ Check that the vehicle qualifies (new, U.S.-assembled, personal use)

• ✅ Work with a tax advisor if your income is near the phaseout range

• ✅ Save your VIN and loan documents for tax time

  
  

Section 70203 of the One Big Beautiful Bill Act could be one of the most practical, everyday savings tools tucked inside a massive piece of legislation.

Don’t miss it — and don’t leave money on the table.

The information provided in this blog post is intended for general informational purposes only and should not be construed as legal or tax advice. While every effort has been made to ensure the accuracy of the information, tax laws and regulations are subject to change, and individual circumstances may vary. For personalized advice and to ensure compliance with current tax laws, it is strongly recommended that you consult with a qualified tax professional, financial advisor, or legal counsel. The author and publisher of this blog assume no responsibility for any errors or omissions, or for any actions taken based on the information contained herein.