In the United States, a newly enacted tax break tucked into President Donald Trump’s sweeping One Big Beautiful Bill Act offers the tantalizing possibility of deducting up to $10,000 in auto-loan interest but the reality for most drivers may be far more modest.
Officially effective for cars bought between 2025 and 2028, the deduction lets qualifying taxpayers subtract up to $10,000 of the interest paid on a new, U.S.-assembled vehicle loan from their taxable income, even if they take the standard deduction. But experts warn that few will unlock the full benefit.
That’s because reaching the $10,000 cap requires paying that much in interest within a single year, something most buyers simply don’t do. Analysts say you’d likely need a loan on a vehicle well into the six-figure range to generate that much interest in one tax year, an outcome out of reach for the average car buyer.
On top of that, strict rules narrow eligibility: the deduction applies only to new personal vehicles assembled in the U.S., excludes used or leased cars, and gradually phases out for higher earners. Middle-income buyers who do qualify might still only deduct a few thousand dollars in interest, translating into a few hundred dollars in actual tax savings.
Critics argue that the benefit’s design effectively steers relief toward more expensive purchases and well-off taxpayers, rather than easing transportation costs for typical Americans.
In short, while the headline figure grabs attention, the fine print suggests fewer than expected will hit the full $10,000 mark and many won’t qualify at all.
