The "One Big Beautiful Bill Act" (OBBBA) introduces a new deduction for interest paid on a new car loan. Under the 2025 tax law, the Car Loan Interest Deduction allows taxpayers to deduct up to $10,000 in interest on new car loans, but it phases out based on Modified Adjusted Gross Income (MAGI). To qualify, the car must be new, built in the US, and for personal use.
The tax deduction phases out for taxpayers with modified adjusted gross income that exceeds $100,000 (or $200,000 for joint filers).
https://www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions has more info about this deduction.
@JBogs Thanks for the question!!
The "One Big Beautiful Bill Act" (OBBBA) introduces a new deduction for interest paid on a new car loan. Under the 2025 tax law, the Car Loan Interest Deduction allows taxpayers to deduct up to $10,000 in interest on new car loans, but it phases out based on Modified Adjusted Gross Income (MAGI). To qualify, the car must be new, built in the US, and for personal use.
The tax deduction phases out for taxpayers with modified adjusted gross income that exceeds $100,000 (or $200,000 for joint filers).
https://www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions has more info about this deduction.
@JBogs Thanks for the question!!
From IRS: Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. (Lease payments do not qualify.)
It will fully phase out at $250,000 for joint returns.
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