Taxpayers who bought a new car in 2025 can, in some cases, deduct interest on their auto loan. The deduction was created by the One Big Beautiful Bill Act, which also removed taxes on tips and overtime for qualifying workers, and relevant to new car shoppers eliminated a tax credit for buying electric vehicles.
The new tax break will be available even to people who don't itemize deductions, but there are some caveats that could limit its reach, including vehicle assembly location and loan issuance date.