Auto Loan Tax Deduction: What You Need to Know

If you live in Macomb, Illinois and you’re thinking about buying a new car, truck, or SUV, there’s some good news on the horizon. Starting in 2025, the federal government is rolling out a new Auto Loan Tax Deduction that can help you save money at tax time when you finance a qualifying new vehicle.

For drivers in the Macomb area — whether you’re commuting to WIU, running errands around town, or taking trips up to Peoria or the Quad Cities — this deduction could mean up to $10,000 per year in tax savings if you qualify.

The best part? Many of the most popular vehicles you already see on Macomb roads — like the Ford F-150, Chevy Silverado, Toyota Camry, and Honda Accord — are on the IRS’s eligibility list.

• You’re buying a new vehicle (cars, SUVs, pickup trucks, minivans, motorcycles).
• The car is assembled in the U.S. and has a VIN you report on your tax return.
• The loan is a first lien auto loan (not a lease, not a refinance beyond your original amount, not a second mortgage).
• It’s for personal use (not business, fleets, or company cars).

• Up to $10,000 per year on your taxes.
• If your income is over certain limits, the deduction phases out:
  • Over $100,000 for individuals.
  • Over $200,000 for couples filing jointly.
  • Fully phased out at $150,000 (single) / $250,000 (joint).

• Used cars or leases (sorry, only brand new).
• Business or fleet vehicles.
• Cars with salvage titles or those bought for parts.
• Loans from family or related parties.

• For auto loans started January 1, 2025 – December 31, 2028.
• After 2028, the deduction is set to expire unless Congress extends it.

• Keep your loan paperwork and VIN info.
• Report the VIN on your tax return.
• Keep proof the car was assembled in the U.S. (IRS provides a list of qualifying vehicles).
• Be ready in case the IRS asks you to show documents.

1. Don’t assume every new car qualifies — check the IRS eligibility list before you buy.
2. Remember: this is a deduction, not a rebate. It lowers your taxable income, not your loan payment.
3. The IRS may audit, so keep your records safe.

Have more questions? See your local tax epert.