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The Treasury Department is implementing President Donald Trump’s No Car Interest Tax policy, a measure designed to lower costs for American families, Treasury Secretary Scott Bessent said Wednesday.
The policy, enacted as part of Trump’s “big, good bill” allows eligible taxpayers to deduct up to $10,000 a year in car loan interest on new US-built vehicles purchased between 2025 and 2028.
“The Treasury is using President Trump’s No Tax on American Car Loan Interest, putting money back into the pockets of working and middle-class families,” Bessent wrote in X.
“For new US assembled vehicles purchased in 2025-2028, eligible taxpayers can deduct up to $10,000 per year in auto loan interest, regardless of whether they itemize or take the standard deduction.”
“BIG, GOOD BILL” INCLUDES CAR INTEREST TAX WITHDRAWAL. DO YOU QUALIFY?
Treasury Secretary Scott Bessent said Wednesday that he is implementing President Donald Trump’s No Car Interest Tax policy. (Eric Lee/Bloomberg via Getty Images/Getty Images)
Bessent said the Treasury Department and the IRS are issuing clear guidance so taxpayers “know exactly how the withholding works.”
“For millions of Americans, a car is not a luxury, it’s how you get to work, school, and childcare,” said Bessent. “This deduction helps reduce monthly costs and makes cars more affordable when families need them the most.
The tax break only applies to cars assembled in the US, which Bessent said are intended to support American workers.
“Tariff reductions also support American workers by applying to vehicles assembled only in the US, strengthening domestic production,” he said.
AUTOMATIC LOAN INTEREST WAIVER IN ‘BIG, GOOD BILL’
The tax break applies exclusively to vehicles assembled in the US (iStock / Stock)
Signed into law on July 4, the One Big Beautiful Bill Act includes several requirements for deducting car loan interest. Applies only to new cars, SUVs, vans, pickup trucks and motorcycles weighing less than 14,000 pounds. Used vehicles are not eligible.
To qualify, the vehicle must be purchased for personal use – not for business or commercial purposes – and its final assembly must be done in the US.
Final assembly refers to the process in which the major parts of the car — the engine, transmission, body and chassis — are fully assembled, and the car is finished in a US-based manufacturing plant, automotive expert Lauren Fix previously told FOX Business.
Buyers must also be the original owner of the vehicle, and the loan must be secured by a lien against it, according to Kelley Blue Book.
AMERICANS WILL GET A ‘BIG’ TAX REFUND NEXT YEAR, SECRETARY SAYS
The policy was established as part of Trump’s “big, good debt.” (Yuri Gripas/Abaca/Bloomberg via Getty Images/Getty Images)
This deduction is reduced for high earners, from people making more than $100,000 a year and joint filers making more than $200,000.
The IRS has not released an official list of eligible vehicles and models.
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“I will make interest on auto loans fully tax deductible,” Trump said at a North Carolina campaign rally in October 2024, according to Reuters.
“I will only do it if they build that product – which is the car – in the United States.”
The Treasury Department and the IRS did not immediately respond to FOX Business’ request for comment.
