Car Buyers Guide to The ‘Big, Beautiful Bill’: What You Need to Know

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The ‘Big, Beautiful Bill’ now lets buyers who finance a vehicle claim a tax deduction on their loan interest. In this guide, you’ll learn how the deduction works, who qualifies, why acting fast on electric vehicles matters, and how we can help you maximize your savings at Airport CDJR.

How the Auto Loan Interest Deduction Works

With this new law, eligible taxpayers can write off up to $10,000 of auto loan interest each year. Because it’s an “above-the-line” deduction, you can use it whether you itemize or take the standard deduction. Reducing your adjusted gross income in this way lowers your tax bill and frees up extra funds during tax season.

Until now, interest on a car loan was a personal expense with no tax benefit. Under the ‘Big, Beautiful Bill’, financing a new vehicle can actually shrink your tax liability. For example, financing a $50,000 Ram truck at 5% APR over five years could generate more than $6,600 in interest. For those that qualify, you can now deduct the money you pay in interest, each year.

How to Qualify for the Tax Deduction

You can claim the deduction if you meet these requirements:

  • Your new vehicle’s final assembly took place in the United States.
  • You purchase the vehicle outright with a standard, secured auto loan.
  • The vehicle is for personal, noncommercial purposes 
  • Your modified adjusted gross income does not exceed $100,000 for single filers or $200,000 for joint filers. Above those thresholds, your deduction is reduced by $200 for each $1,000 of additional income.
  • Qualifying vehicles include new cars, vans, minivans, trucks, SUVs, and motorcycles that weigh less than 14,000 lbs.
  • Vehicle purchased between January 1, 2025, and December 31, 2028.
  • Leases and Commercial Vehicles are excluded

If all criteria apply, include the deductible interest on your tax return to lower your taxable income.

EV Tax Credits are Ending Soon

If you’re considering an electric vehicle, the $7,500 federal credit for new EVs ends on September 30, 2025. After that date, no federal rebate will remain. State incentives may also expire or change on different schedules, so be sure to check your local programs. 

Models like the Jeep Wagoneer S and other qualifying plug-ins like the Jeep Wrangler 4xe, still qualify for all or a portion of the credit. Leases do not qualify for the auto loan interest deduction, though you may still receive part of the EV credit through your lease until the end of September. Contact us with any questions about specific vehicle eligibility.

Why Buy from Airport CDJR

At Airport Chrysler Dodge Jeep Ram, we’re proud to be family-owned and operated and serve the greater Kansas City area. With transparent pricing on new and used vehicles, flexible financing and lease options, we make car buying easy and straightforward. We offer servicing and maintenance at our dealership and offer parts and accessories for all your vehicle needs.

Interested in learning more about the new tax deduction on new vehicles? Contact us at Airport CDJR and we’ll help answer any questions you have for vehicle eligibility or walk you through financing options.

New Chrysler, Dodge, Jeep, and Ram Financing near Kansas City

At Airport CDJR, we make financing your new vehicle easy. We can help estimate your potential interest deductions when you work with our financing team. We’re here to support you every step of the way. Visit us in Platte City, MO near Kansas City, click here to schedule a test drive or give us a call at 816-219-2000.