IRS Tax Tip: Interest on Loans for New U.S.-Assembled Vehicles May Be Deductible Up to $10,000
The Internal Revenue Service (IRS) issued Tax Tip 2026-79 on November 3, noting that this is a popular time of year to purchase a new vehicle and that the purchase could qualify for a tax benefit. Under the Working Family Tax Cuts, taxpayers may be able to deduct their car loan interest if certain eligibility criteria are met.
The deduction is available for both itemizing and non-itemizing taxpayers, the IRS said. The VIN must be included on the tax return for any year the deduction is claimed. The maximum annual deduction is $10,000, and it phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).
Qualifying vehicles can include a car, minivan, SUV, pick-up truck or motorcycle. The vehicle must have a gross vehicle weight rating of less than 14,000 pounds, must have undergone final assembly in the United States, and must be new; used vehicles do not qualify. Final assembly can be verified through the information label attached to the vehicle at the dealership, the vehicle identification number, or the National Highway Traffic Safety Administration (NHTSA) VIN Decoder.
Interest qualifies only when paid on a loan that was originated after December 31, 2024, was used to purchase a qualifying vehicle used by the taxpayer, was secured by a lien on the vehicle, and was for personal, not business, use. Leases are not eligible. If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible.
The IRS pointed taxpayers to Publication 6126, "Purchased a new vehicle?", for more information.
(Source: Internal Revenue Service)
Source: Internal Revenue Service
Published by GSM · USA (original Chinese edition)
Photo: 图：美国国税局总部大楼（华盛顿联邦三角区）。Carol M. Highsmith 摄，公共领域，经 Wikimedia Commons。 / Photo: The Internal Revenue Service Building in the Federal Triangle, Washington, D.C. Photo by Carol M. Highsmith, public domain, via Wikimedia Commons.
