Among the politically resonant provisions of the One Big Beautiful Bill Act, the new car loan interest deduction enacted under §70203 of P.L. 119-21, codified at IRC §163(h)(4) ², has generated outsized public attention relative to its practical scope. Up to $10,000 of annual interest on qualifying new auto loans is deductible above-the-line for tax years 2025 through 2028. The deduction comes with narrow eligibility rules and a sharply curtailed phaseout that excludes most upper-middle-income filers from benefiting.
For our practice, the conversation is largely about expectation management: this is a real tax benefit, but most clients who finance a new vehicle will get a modest deduction at best, and many will get nothing.
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