Understanding the New Auto Loan Interest Deduction Under the One, Big, Beautiful Bill Act (OBBBA)

On July 4, 2025, the OBBBA was signed into law, introducing a tax benefit under Section 70203 — No Tax on Car Loan Interest.

Tax Deduction: Taxpayers may be able to deduct qualified auto loan interest per year for tax years 2025 through 2028.

Eligibility Requirements:

• The interest must be paid from a loan on a new passenger vehicle used for personal purposes (used vehicles do not qualify).
• Vehicle was purchased on or after January 1, 2025.
• Borrowers must include their vehicle’s VIN (Vehicle Identification Number) when claiming the deduction.

Qualifying Vehicles:

• Cars, minivans, vans, SUVs, pickup trucks, and motorcycles.
• Must be assembled in the United States (Vin Lookup).
• Must have a gross vehicle weight rating under 14,000 pounds.

Interest Paid Information:

Your total interest paid year to date for your qualifying vehicle is found on your end of year statement or on the statement of the month your loan was paid off. 

Heritage Grove Federal Credit Union advises members to consult their tax advisor or visit the IRS website  “No tax on car loan interest (Section 70203)” for full eligibility guidelines.