Tax Deduction for New Vehicle Interest

Tax Deduction for New Vehicle Interest

The One, Big, Beautiful Bill Act (OBBBA), which was enacted July 4, 2025, included a provision for deducting interest paid on loans for the purchase of certain new personal vehicles. 

The bill specifically excludes any vehicle that was not finally assembled in the United States. This means that even if the brand is American, the vehicle must complete its final assembly step domestically to be eligible.

Does the vehicle qualify for the deduction?

1. New vehicles only. Used vehicles do not qualify.
2. Was the vehicle purchased in 2025?
3. Are you the first owner of the vehicle?
4. Is the vehicle for personal use? (Commercial use vehicles do NOT qualify)
5. Is the vehicle a car, minivan, sport utility vehicle, pickup truck or motorcycle? (ATV, campers, UTV, etc. do NOT qualify)
6. Is the gross vehicle weight rating less than 14,000 pounds?
7. Was the Final Assembly of the vehicle in the USA? (VIN starts with 1, 4 or 5; and some that start with 7 also qualify. VINs can be checked at https://vpic.nhtsa.dot.gov/decoder/)