Tax Law

What the One, Big, Beautiful Bill Means for Vehicle Buyers

The IRS has issued new guidance on a major tax benefit created under the One, Big, Beautiful Bill: a deduction for interest paid on qualifying car loans. This deduction applies to loans taken out after December 31, 2024, to purchase new, made-in-America vehicles for personal use. It’s available to taxpayers whether they take the standard deduction or itemize, making it broadly accessible.

Who Qualifies for the Deduction

The proposed regulations clarify several key requirements. First, the vehicle must be newly purchased and assembled in the United States. The guidance explains how to determine whether a vehicle meets the “final assembly in the U.S.” requirement. It also outlines how to identify which loans qualify and how to calculate the amount of deductible interest. The deduction is capped at $10,000 per year, and the rules specify which taxpayers are eligible to claim it.

What Lenders Need to Know

Lenders also have new responsibilities. Beginning in 2025, certain lenders and other interest recipients must file information returns with the IRS reporting the interest they received and other loan details. These filings help taxpayers substantiate their deduction. The proposed regulations explain who must report, what information must be included, and how and when the reporting must occur.

Why This Matters

For taxpayers planning to purchase a new vehicle, this deduction could provide meaningful savings over the life of a loan. For lenders, understanding the reporting requirements will be essential to supporting customers who want to claim the benefit. The IRS is accepting public comments on the proposed regulations through February 2, 2026.