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Level 2
posted Aug 6, 2025 9:06:00 AM

New car sales tax with standard deduction?

Is new car sales tax deductible in 2025? Assume using standard deduction.

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2 Replies
Employee Tax Expert
Aug 6, 2025 9:12:19 AM

You must itemize to get the new car sales tax deduction. This has not changed in the One Big Beautiful Bill that passed. The new car sales tax is only deductible if you itemize and is part of the sales tax deduction. The SALT tax deduction has gone up for itemized deductions.

The Big Beautiful Bill gives deduction for interest on the new car purchased as long as the vehicle is a personal use vehicle and not used in trade or business. This is a $10,000 interest deduction on qualified interest and phases out for single filers at modified adjusted gross income of $10,000 ($200,000 for married filing joint)

No Tax on Car Loan Interest 

Level 2
Aug 6, 2025 9:25:36 AM

Thanks