New deduction allows interest write-offs for new cars assembled in the US, excluding foreign-built vehicles regardless of brand.
The US tax code now permits deductions for interest paid on auto loans, provided the vehicle underwent final assembly in America. The rule applies to new cars financed with secured loans for personal use within a specified period, regardless of the automaker’s origin.
Eligibility hinges on the assembly location, not the brand. A foreign-branded car built in Kentucky qualifies, while a US-branded truck assembled in Mexico does not. Taxpayers must verify assembly via the VIN using the NHTSA decoder or obtain written confirmation from the dealer.
The deduction reduces taxable income by eligible interest paid, with savings tied to the taxpayer’s marginal rate. For example, a 22% bracket filer could save roughly 22 cents per deductible dollar. The benefit phases out at higher incomes and is subject to caps.