Trump's Tax Legislation Offers Car Loan Assistance, But The Nuances Are Critical | Carscoops

      American-made vehicles could receive incentives under a new bill that has recently been approved by the House.

      On May 23, 2025, the House of Representatives passed legislation that includes a deduction for auto loan interest. This deduction, which would last for four years, allows for a maximum of $10,000 per year. A variety of vehicles will be eligible, provided their final assembly took place in the U.S.

      During his campaign, Donald Trump mentioned the possibility of an auto loan interest deduction, and it is now becoming a reality. This provision was included in the 'One Big Beautiful Bill Act,' which was narrowly passed by the House.

      Leading up to the vote, the White House promoted the deduction as a way to encourage U.S. production. They stated, "It rewards companies that manufacture their products in America with lower taxes and allows Americans who purchase an American-made vehicle to fully deduct their auto loan interest."

      However, the details are complex and are outlined in section 110104. The incentive is set to apply to vehicles purchased between December 31, 2024, and January 1, 2029.

      Eligible vehicle types include passenger vehicles such as cars, vans, trucks, and SUVs, as well as motorcycles, all-terrain vehicles, and RVs. However, to qualify, these vehicles must have had their "final assembly" completed in the United States.

      Moreover, individuals may not actually be able to "fully deduct" the value of their loan as claimed by the White House. Instead, there is an annual interest cap of $10,000.

      Additionally, wealthier consumers would face a penalty based on their income. According to the bill, loan interest on qualified passenger vehicles would be “reduced by $200 for each $1,000 (or portion thereof) by which the taxpayer’s modified adjusted gross income exceeds $100,000 ($200,000 for joint returns).”

      Other restrictions apply as well, with the bill excluding leases, commercial vehicles, and those with salvage titles. Fleet acquisitions and vehicles purchased with personal cash loans are also not included.

      With all these factors considered, the bill now moves to the Senate, where it is expected to encounter challenges due to concerns over debt and significant cuts to programs relied upon by millions of Americans. According to Politico, the bill "can’t pass without major changes," leaving the fate of the auto interest deduction uncertain.