Auto Loan Tax Deduction: What You Need to Know

If you’re shopping for a new ride in Delavan, Wisconsin, there’s a new way to save on taxes. Starting in 2025, the federal government will roll out the Auto Loan Tax Deduction, giving qualifying drivers the chance to deduct up to $10,000 per year when financing a brand-new, U.S.-assembled car, truck, or SUV.

From daily commutes along Highway 11 to trips up I-43 toward Milwaukee or weekends on Delavan Lake, this deduction can make owning a new vehicle more affordable. Models like the Ford F-150, Chevy Silverado, Toyota Camry, Honda Accord, and Jeep Grand Cherokee are already on the IRS-approved list — giving Delavan drivers plenty of great options that qualify for these savings.

• You’re buying a new vehicle (cars, SUVs, pickup trucks, minivans, motorcycles).
• The car is assembled in the U.S. and has a VIN you report on your tax return.
• The loan is a first lien auto loan (not a lease, not a refinance beyond your original amount, not a second mortgage).
• It’s for personal use (not business, fleets, or company cars).

• Up to $10,000 per year on your taxes.
• If your income is over certain limits, the deduction phases out:
  • Over $100,000 for individuals.
  • Over $200,000 for couples filing jointly.
  • Fully phased out at $150,000 (single) / $250,000 (joint).

• Used cars or leases (sorry, only brand new).
• Business or fleet vehicles.
• Cars with salvage titles or those bought for parts.
• Loans from family or related parties.

• For auto loans started January 1, 2025 – December 31, 2028.
• After 2028, the deduction is set to expire unless Congress extends it.

• Keep your loan paperwork and VIN info.
• Report the VIN on your tax return.
• Keep proof the car was assembled in the U.S. (IRS provides a list of qualifying vehicles).
• Be ready in case the IRS asks you to show documents.

1. Don’t assume every new car qualifies — check the IRS eligibility list before you buy.
2. Remember: this is a deduction, not a rebate. It lowers your taxable income, not your loan payment.
3. The IRS may audit, so keep your records safe.

Have more questions? See your local tax epert.