DISCLAIMER: USCCU does not provide tax advice. The information in this article is for educational purposes only. Please consult your tax professional to determine eligibility and benefit amounts based on your unique financial situation.
A new federal law passed in July 2025 introduced a temporary opportunity for anyone considering the purchase of a new, American-assembled vehicle: the interest you pay on your auto loan may now be tax-deductible.
This means that if you’re thinking about buying a new car, and financing that purchase through a loan, you could possibly be eligible for a tax deduction that helps you keep more money in your pocket. While every situation is different, the new deduction is worth knowing about if you’re in the market for a vehicle.
Here’s what members of US Community Credit Union should know.
What’s the New Benefit?
The law now allows individuals who finance the purchase of a new vehicle assembled in the United States to deduct up to $10,000 per year in interest paid on their auto loan.
This is a significant change as auto loan interest hasn’t traditionally been deductible for personal-use vehicles. For members who qualify, it could result in long-term savings over the life of a loan.
What Types of Vehicles Qualify?
To be eligible for the deduction, the vehicle must meet the following criteria:
- New Vehicle (not used or pre-owned)
- Assembled in the United States
- For personal use (not a business vehicle)
- Gross weight of less than 14,000 lbs (includes most sedans, SUVs, trucks, vans, and motorcycles)
The law applies only to vehicles assembled in the U.S., regardless of brand origin. That includes many models from Ford, Chevrolet, Tesla, Toyota, Honda, and others with U.S. manufacturing plants.
If you’re unsure whether your desired vehicle qualifies, the National Highway Traffic Safety Administration (NHTSA) and automaker websites often provide final assembly location details.
What Could That Mean for You?
If you qualify under the new law, the interest you pay, up to $10,000 annually, could potentially be deducted when you file your federal income taxes. That may result in tax savings, depending on your financial situation. Keep in mind, your savings will vary depending on your income, filing status, and whether you meet the law’s eligibility requirements. Please consult a qualified tax professional to understand how this may apply to your specific situation.
How Can US Community Credit Union Help?
Whether you’re just starting to look for your next car or ready to finalize a deal, we’re here to support you at every step:
- Low-rate financing for new auto purchases
- Fast, local pre-approvals so you can shop with confidence
- Helpful tools to estimate your monthly payment and total interest
- Assistance identifying vehicles that meet the U.S.-assembly requirement
Already financed a qualifying vehicle with another lender? Ask us about refinancing options that may give you a better rate, and keep you eligible for the deduction moving forward.
Take the Next Step
If you’re planning to buy a new car, now’s a smart time to explore your options. Our team is available to help you:
- Understand the basics of the new deduction
- Choose the right loan and payment plan
- Shop confidently knowing which vehicles may qualify
Call us, stop by a branch, or apply online today to get started.
Disclosures:
*Rates and terms based on individual’s credit score and qualifications. Rates and terms subject to change. A new hard inquiry credit report pulled by US Community Credit Union is required. All loans subject to approval. Membership Required. Terms and conditions may apply.
**USCCU does not provide tax advice. The information in this article is for educational purposes only. Please consult your tax professional to determine eligibility and benefit amounts based on your unique financial situation.