New Tax Deduction: Up to $10,000 in Interest on Qualified Vehicle Loans

Starting January 1, 2025, taxpayers can take advantage of a new deduction: up to $10,000 in interest paid on a loan used to purchase a qualified personal-use vehicle.

This change offers significant savings for individuals planning to buy a new car, truck, or motorcycle in the coming year.

What Qualifies as a “Qualified Vehicle”?

To claim this deduction, your vehicle must meet the following criteria:

• Purchase Date: The vehicle must be purchased, and the loan originated, after December 31, 2024.

  
  

• Condition: The vehicle must be brand new.

  
  

• Assembly Location: Final assembly must have occurred in the United States.

  
  

• Type & Weight: Eligible vehicles include cars, minivans, SUVs, pickup trucks, or motorcycles with a gross vehicle weight rating under 14,000 pounds.

  
  

• Usage: The vehicle must be for personal use only, not for commercial or business purposes.

  
  

Why This Matters

This deduction could make financing a new vehicle more affordable, especially for those who plan to take out a loan. With interest rates still fluctuating, this tax break provides a welcome opportunity to reduce costs.