Auto Loan Tax Deduction: What You Need to Know

If you live in Quincy, Illinois, buying a new vehicle between 2025 and 2028 could put extra money back in your pocket. Thanks to the new Auto Loan Tax Deduction, qualifying drivers can deduct up to $10,000 per year on their taxes when financing a brand-new, U.S.-assembled car, truck, or SUV.

From cruising down Broadway Street to weekend road trips along the Mississippi or heading toward Springfield, this deduction makes upgrading your ride more affordable. Popular models like the Ford F-150, Chevy Silverado, Toyota Camry, and Jeep Grand Cherokee are among the IRS-approved list — giving Quincy-area drivers plenty of choices that qualify for this valuable tax break.

• 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.