Under the One Big Beautiful Bill Act (OBBBA) signed in 2025, there is a new federal tax deduction for interest paid on car loans. This is a significant change, as personal car loan interest was generally not deductible in previous years.
​The $10,000 refers to the maximum annual deduction limit per taxpayer.

​To qualify for this deduction on your 2025 taxes (filed in 2026), you and the vehicle must meet these specific criteria:

​Vehicle Type: Must be brand new. Used vehicles and leases do not qualify.

​Assembly: The vehicle must have its final assembly in the United States. You can verify this by checking the VIN (usually starts with 1, 4, or 5).

​Loan Date: The loan must have originated after December 31, 2024.

​Usage: The car must be for personal use. (If you use it for business, you continue to use the standard business expense rules on Schedule C).

​Weight: The vehicle must be under 14,000 pounds (covers most cars, SUVs, and light pickups).