Potential Tax Deduction for Car Loan Interest: What You Need to Know
Starting in 2025, a new federal tax benefit could help you save on your recent car purchase. From 2025 through 2028, individuals can deduct interest paid on qualifying new car loans, up to $10,000 annually.
Who Qualifies?
To claim the deduction, your loan must:
- Start after December 31, 2024
- Be used to purchase a new vehicle (used or leased vehicles do not qualify)
- Be for personal use only (business vehicles do not qualify)
- Be secured by a lien on the vehicle
What Counts as a Qualified Vehicle?
- Cars, SUVs, minivans, pickup trucks, or motorcycles
- Must weigh less than 14,000 pounds
- Undergo final assembly in the United States
How to Check Assembly Location
- Look for the final assembly location on the vehicle information label (driver’s doorjamb)
- Or use the VIN Decoder tool from the National Highway Traffic Safety Administration (NHTSA): https://www.nhtsa.gov/vin-decoder
Important Information for UFCU Members
- Review Your Interest Paid:
Check your December 2025 monthly statement to see your Interest Paid Year-to-Date on your new auto loan.
- Where to Find Your Statement:
Log in to UFCU Online Banking to access your statement anytime.
- Tax Form Notice:
The official IRS tax form for this deduction has not yet been approved. UFCU will not send a tax form for this benefit.
For more detailed information, please refer to the IRS for guidance: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions.
This article is for general informational purposes only. UFCU does not provide tax, legal, or accounting advice. Tax rules are complex and fact-specific, and guidance can change. Consult a qualified tax professional regarding your situation, including eligibility and documentation requirements.