Can You Deduct Auto Loan Interest on an American-Made Vehicle?

For many years, interest paid on a personal auto loan generally was not deductible on a federal income tax return. A new federal tax provision has changed that for certain new vehicles.

Under legislation commonly known as the One Big Beautiful Bill Act, qualifying taxpayers may be able to deduct up to $10,000 per year in interest paid on a qualifying new vehicle loan for tax years 2025 through 2028.

There is an important requirement: the vehicle must have undergone final assembly in the United States.

That means shoppers considering a new vehicle should understand the difference between an American brand and a vehicle that actually meets the federal government's U.S. final-assembly requirement.

What Is the New Auto Loan Interest Tax Deduction?

The federal tax code now allows qualifying individuals to deduct certain interest paid on loans used to purchase new passenger vehicles.

The deduction is available for tax years:

• 2025
• 2026
• 2027
• 2028

Qualifying taxpayers may deduct up to $10,000 of eligible vehicle-loan interest each year.

Another important feature is that the deduction may be available even if you do not itemize deductions. Taxpayers who use the standard deduction can potentially claim the qualified vehicle-loan interest deduction as well.

What Does a Vehicle Need to Qualify?

According to current IRS guidance, several requirements must be met. In general, the vehicle must:

• Be a new vehicle whose original use begins with the taxpayer.
• Be purchased for personal use rather than predominantly business or commercial use.
• Have undergone final assembly in the United States.
• Be a qualifying passenger vehicle such as a car, SUV, pickup truck, minivan, van or motorcycle.
• Have a gross vehicle weight rating of less than 14,000 pounds.
• Be purchased using a qualifying loan originated after December 31, 2024.
• Have the qualifying loan secured by a lien on the vehicle.

The taxpayer also must include the vehicle's Vehicle Identification Number, or VIN, when claiming the deduction on a federal tax return.

How Much Auto Loan Interest Can You Deduct?

The maximum deduction is $10,000 per tax return per year.

That does not mean every person who finances a qualifying vehicle automatically receives a $10,000 deduction. You can generally deduct only the amount of qualifying interest you actually paid during the tax year, subject to the $10,000 maximum and applicable income limitations.

Example

Suppose you purchase and finance a qualifying new U.S.-assembled vehicle and pay $4,500 in qualifying interest during the year.

If you otherwise qualify for the full deduction, you could potentially deduct $4,500 from your taxable income.

If you paid $11,500 in qualifying interest, the annual deduction would generally be limited to $10,000 before considering the income phaseout rules.

Your actual tax savings depend on your individual tax situation, taxable income, filing status and other factors.

What Are the Income Limits?

The auto loan interest deduction is subject to an income phaseout based on modified adjusted gross income, or MAGI.

Once MAGI exceeds the applicable threshold, the maximum allowable deduction is reduced under the IRS phaseout formula. Current IRS instructions reduce the deduction by $200 for each $1,000, or portion of $1,000, by which MAGI exceeds the applicable threshold.

Does "American-Made" Mean It Has to Be a Ford, Chevrolet or Other American Brand?

No.

This is one of the most important things to understand about the deduction.

The IRS requirement is based on where the specific vehicle underwent final assembly, not simply where the automaker is headquartered or whether consumers generally consider the brand American.

A vehicle from an American manufacturer can fail to qualify if its final assembly occurred outside the United States. Likewise, a vehicle sold by a foreign-headquartered manufacturer could potentially qualify if the specific vehicle underwent final assembly in the United States and meets all of the other requirements.

For this tax provision, the specific vehicle and its VIN matter.

Which New Ford Vehicles May Qualify?

Ford currently manufactures several popular vehicles at assembly plants in the United States. Based on current Ford manufacturing information, the following models are among the Ford vehicles assembled in the U.S.

Eligibility should always be confirmed using the specific vehicle's VIN and vehicle information label before relying on the tax deduction. Manufacturing locations and vehicle specifications can change by model year or configuration.

Do the Ford Maverick, Bronco Sport or Mustang Mach-E Qualify?

Not every Ford is currently assembled in the United States.

According to Ford's current manufacturing information, the Ford Maverick and Ford Bronco Sport are assembled in Hermosillo, Mexico, while the Ford Mustang Mach-E is assembled in Cuautitlán, Mexico.

Because the federal auto loan interest deduction requires final assembly in the United States, vehicles with final assembly in Mexico do not meet that particular requirement under the current rules.

This is why consumers should not assume that every Ford—or every vehicle from any American automaker—automatically qualifies.

What About Ford Super Duty Trucks?

Ford assembles Super Duty trucks in the United States, including at Kentucky Truck Plant. However, the tax law also requires a qualifying passenger vehicle to have a gross vehicle weight rating of less than 14,000 pounds.

Super Duty GVWR varies considerably depending on model, configuration and equipment. Some configurations may satisfy the weight requirement while others may not.

If you are considering an F-250 or F-350 and the auto loan interest deduction is important to you, verify both the final-assembly location and GVWR of the specific truck.

Do Used Vehicles Qualify?

No. Under current IRS guidance, the original use of the qualifying vehicle must begin with the taxpayer claiming the deduction.

That generally means this deduction is intended for qualifying new vehicle purchases, not used vehicle purchases.

Do Leased Vehicles Qualify?

No. Lease payments do not qualify for the personal auto loan interest deduction.

The provision applies to qualifying interest paid on an eligible loan used to purchase a vehicle.

Can You Claim the Deduction if You Use the Standard Deduction?

Yes, potentially.

The IRS states that the qualified vehicle-loan interest deduction is available to taxpayers who itemize deductions as well as taxpayers who use the standard deduction.

This makes the provision different from some deductions that are available only when a taxpayer itemizes.

Does Refinancing Eliminate the Deduction?

Not necessarily.

Current IRS guidance states that if an otherwise qualifying vehicle loan is later refinanced, interest paid on the qualifying refinanced amount can generally remain eligible for the deduction.

Individual circumstances can differ, so taxpayers should consult current IRS guidance or a qualified tax professional when refinancing.

How Do You Know Where a Vehicle Was Assembled?

The IRS provides several ways to verify whether a vehicle underwent final assembly in the United States.

1. Check the vehicle information label. The vehicle label at the dealership includes manufacturing information.
2. Check the VIN. The Vehicle Identification Number can be used to identify the vehicle's manufacturing plant.
3. Use the NHTSA VIN Decoder. The National Highway Traffic Safety Administration provides a VIN-decoding tool that can identify the plant of manufacture.
4. Ask your dealership. Our team can help you locate the VIN and final-assembly information for a vehicle you are considering.

Why You Should Check the Actual VIN Before Purchasing

Vehicle manufacturing can change over time. Automakers may move production, introduce new factories, change model-year sourcing or manufacture similar vehicles at different plants.

For that reason, a list of qualifying models should never replace checking the actual vehicle.

The best approach is to verify:

• The specific VIN
• The vehicle's final-assembly location
• The vehicle's GVWR
• That the vehicle is new
• That it will be primarily for personal use
• That your financing meets the applicable IRS requirements
• That your income allows you to claim some or all of the deduction

How Is a Tax Deduction Different From a Tax Credit?

This provision is a deduction.

A deduction reduces the amount of income subject to federal income tax. A tax credit generally reduces the amount of tax owed directly.

For example, paying $5,000 in qualifying auto loan interest does not mean you receive $5,000 back from the federal government.

If you qualify, the eligible interest amount is instead used to reduce your taxable income. The actual tax savings associated with that deduction depends on your individual tax situation.

Frequently Asked Questions About the Auto Loan Interest Tax Deduction

Can I write off the interest on my car loan?

You may be able to deduct qualifying interest on a loan used to purchase an eligible new personal-use vehicle for tax years 2025 through 2028. The vehicle, loan and taxpayer must meet IRS requirements.

What is the maximum car loan interest deduction?

The maximum deduction is currently $10,000 per tax return per year, subject to income limitations and other eligibility requirements.

Does my car have to be made in America?

The specific federal requirement is that the vehicle undergo final assembly in the United States. The rule is not based solely on the manufacturer's headquarters or brand nationality.

Does a Ford F-150 qualify for the auto loan interest deduction?

Ford currently assembles F-150 trucks in Dearborn, Michigan, and Claycomo, Missouri. A new F-150 may meet the final-assembly requirement, but the specific vehicle, loan, taxpayer and intended use must meet all IRS requirements.

Does a Ford Bronco qualify?

The Ford Bronco is assembled in Wayne, Michigan. A qualifying new Bronco purchase may therefore satisfy the U.S. final-assembly requirement.

Does a Ford Ranger qualify?

The Ranger is assembled at Michigan Assembly Plant in Wayne, Michigan. A qualifying new Ranger may satisfy the final-assembly requirement.

Does a Ford Explorer qualify?

Ford currently builds the Explorer at Chicago Assembly Plant in Illinois. A qualifying new Explorer may therefore satisfy the U.S. final-assembly requirement.

Does a Ford Maverick qualify?

Ford currently assembles the Maverick in Hermosillo, Mexico. Under the current federal rule requiring final assembly in the United States, a Mexican-assembled Maverick would not satisfy that requirement.

Can I deduct interest on a used car?

No. Used vehicle purchases generally do not qualify because the original use of the vehicle must begin with the taxpayer claiming the deduction.

Can I deduct lease interest or lease payments?

No. Lease payments do not qualify under the current vehicle-loan interest deduction.

Do I have to itemize my taxes?

No. The deduction may be available to qualifying taxpayers whether they itemize or take the standard deduction.

How long does the car loan interest deduction last?

Under current federal law, the deduction applies to qualifying interest for tax years 2025 through 2028.

Shop U.S.-Assembled Ford Vehicles at Chuck Anderson Ford

If you are shopping for a new Ford and want to know whether a particular vehicle may meet the U.S. final-assembly requirement, Chuck Anderson Ford can help you identify the VIN and manufacturing information for the exact vehicle you are considering.

Browse our current inventory of popular U.S.-assembled Ford vehicles:

• New Ford F-150 for Sale
• New Ford Bronco for Sale
• New Ford Ranger for Sale
• New Ford Explorer for Sale
• New Ford Expedition for Sale
• New Ford Mustang for Sale

Browse All New Ford Inventory

Questions About a Specific Ford?

Because tax eligibility is based on the specific vehicle and taxpayer—not simply the model name—we recommend checking the VIN and final-assembly location before making any decision based on the deduction.

Chuck Anderson Ford is located at 1910 W Jesse James Road in Excelsior Springs, Missouri, serving Ford shoppers throughout Excelsior Springs, Liberty, Kearney, Lawson, Smithville, Richmond and the greater Kansas City area.

Our team can help you find the VIN, vehicle information label and other vehicle-specific information you may need when researching whether a particular new Ford meets the vehicle requirements.