Auto Loan Tax Deduction: What You Need to Know
If you’re in Oregon, Illinois, there’s a new way to save when buying your next car, truck, or SUV. Starting in 2025, the federal government is offering an Auto Loan Tax Deduction that lets qualifying drivers deduct up to $10,000 per year on their taxes when financing a brand-new, U.S.-assembled vehicle.
Whether you’re commuting along Route 64, driving out to Rockford, or taking weekend trips along the Rock River, this deduction can put real money back in your pocket. Vehicles like the Toyota Camry, Honda Accord, Ford F-150, and Chevy Silverado are among the models that qualify — making it easier than ever for Oregon-area drivers to get behind the wheel of something new while saving at tax time.
Who Can Qualify?
- 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).
How Much Can I Deduct?
- 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).
What Doesn’t Count?
- 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.
When Does This Apply?
- For auto loans started January 1, 2025 – December 31, 2028.
- After 2028, the deduction is set to expire unless Congress extends it.
What Do I Need to Do?
- 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.
Quick Tips
- Don’t assume every new car qualifies — check the IRS eligibility list before you buy.
- Remember: this is a deduction, not a rebate. It lowers your taxable income, not your loan payment.
- The IRS may audit, so keep your records safe.
Have more questions? See your local tax epert.