Under the new federal tax law (part of the One Big Beautiful Bill Act) that is in effect for tax years 2025 through 2028, taxpayers may be allowed to deduct interest on a personal car loan, which is a change from previous law where personal auto loan interest generally wasn’t deductible. Under this provision, you can deduct up to $10,000 per year in interest paid on a qualifying auto loan even if you take the standard deduction. The vehicle must be new, U.S.-assembled, financed with a loan originating after December 31, 2024, and used for personal (not business) purposes. The deduction begins to phase out for single filers with modified adjusted gross income (MAGI) above about $100,000 and for married couples filing jointly above about $200,000, and it phases out entirely at higher income levels (e.g., roughly $150,000 for singles and $250,000 for joint filers).
