Justin Sullivan/Photographer: Justin Sullivan/Ge
The Treasury and the Internal Revenue Service have released proposed regulations on the “No tax on car loan interest” provision enacted under the One Big Beautiful Bill Act.
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The proposed regulations relate to a new deduction for interest paid on vehicle loans incurred after Dec. 31, 2024, to purchase new made-in-America vehicles for personal use. (This new benefit applies to both taxpayers who take the standard deduction and those who itemize deductions.)
The guidance addresses eligibility criteria, including:
What new vehicles are eligible for the deduction, including rules for determining if the final assembly of a vehicle occurred in the United States;How to determine which vehicle loans qualify and the amount of interest paid on a loan that may be deductible;Rules for determining if a new vehicle is purchased for personal use; and,Identifying taxpayers who can take the deduction and clarifying the $10,000 annual deduction limit.
The IRS is looking for comments from the public on these proposed regs; they can be submitted until Feb. 2 through Regulations.gov; instructions are available in the proposed regulations.
