If you are financing a new vehicle in the United States, a recently enacted tax provision could reduce your tax bill by hundreds, potentially thousands, of dollars each year.
The IRS and US Treasury published official guidance on 31 December regarding the 'No Tax on Car Loan Interest' provision, part of the One Big Beautiful Bill Act signed into law on 4 July 2025 as Public Law 119-21, according to the IRS. This measure allows eligible buyers to deduct up to $10,000 (£7,412) in car loan interest annually from their taxable income, whether they itemise deductions or take the standard deduction.
