Understanding the New Auto Loan Interest Deduction Under the One, Big, Beautiful Bill Act (OBBBA)
On July 4, 2025, the OBBBA was signed into law, introducing a tax benefit under Section 70203 — No Tax on Car Loan Interest.
What You Need to Know:
Tax Deduction:
- Taxpayers may be able to deduct qualified auto loan interest per year for tax years 2025 through 2028.
Eligibility Requirements:
- The interest must be paid from a loan on a new passenger vehicle used for personal purposes (used vehicles do not qualify).
- Vehicle was purchased on or after January 1, 2025.
- Borrowers must include their vehicle’s VIN (Vehicle Identification Number) when claiming the deduction.
Qualifying Vehicles:
- Cars, minivans, vans, SUVs, pickup trucks, and motorcycles.
- Must be assembled in the United States (Vin Lookup).
- Must have a gross vehicle weight rating under 14,000 pounds.
Interest Paid Information:
- Your total interest paid year to date for your qualifying vehicle is found on your December 31 monthly statement or under the specific loan account(s) in home & mobile banking.
We advise members to consult their tax advisor or visit the IRS website “No tax on car loan interest (Section 70203)” for full eligibility guidelines.
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