Treasury implementing Trump’s car loan interest tax break, Bessent says

The Treasury Department is implementing President Donald Trump’s “no tax on auto loan interest” policy, a measure aimed at lowering costs for American families, Treasury Secretary Scott Besent said Wednesday.

The policy, enacted as part of Trump’s “One, Big, Beautiful Bill,” allows eligible taxpayers to deduct up to $10,000 per year in auto loan interest on new vehicles assembled in the U.S. and purchased between 2025 and 2028.

“Treasury is implementing President Trump’s decision not to tax U.S. auto loan interest, putting money back into the pockets of working and middle-class families,” Besant wrote on X. “For new U.S.-assembled vehicles purchased in 2025-2028, eligible taxpayers can deduct up to $10,000 per year in auto loan interest, whether they itemize or take the standard deduction.”

The “big, beautiful bill” includes a tax deduction for car loan interest. Are you eligible?

The Treasury Department and the Internal Revenue Service (IRS) are putting out clear guidelines so taxpayers know “exactly how the deduction works,” Bessent said.

“For millions of Americans, a car is not a luxury, but a means of getting to work, school and childcare,” Besant said. “This discount helps lower monthly costs and makes car ownership more affordable when families need it most.”

The tax break applies exclusively to vehicles assembled in the United States, which Besant said is intended to support American workers.

“The tax cut also supports American workers by only applying to vehicles assembled in the United States, boosting domestic manufacturing,” he said.

Car loan interest deducted in a ‘big nice bill’

The tax exemption applies exclusively to vehicles assembled in the United States (iStock/iStock)

The “big, beautiful bill” signed into law on July 4 includes several requirements for the auto loan interest deduction. This only applies to new cars, SUVs, pickup trucks, vans, and motorcycles weighing less than 14,000 pounds. Used vehicles are not eligible.

To qualify, the vehicle must be purchased for personal use — not for business or commercial purposes — and its final assembly must take place in the United States

Final assembly refers to a process in which a vehicle’s major components — engine, transmission, body and chassis — are fully integrated, and the vehicle is completed at a U.S.-based manufacturing facility, automotive expert Lauren Fix previously told FOX Business.

Buyers must also be the first owner of the vehicle, and the loan must be secured with a lien against it, according to Kelley Blue Book.

US Treasury Secretary says Americans will receive a “huge” tax refund next year

The policy was enacted as part of Trump’s “One, Big, Beautiful” bill. (Yuri Grybas/Abaca/Bloomberg via Getty Images/Getty Images)

The deduction shrinks for higher earners, phasing out individuals who earn more than $100,000 a year and joint filers who earn more than $200,000.

The IRS has not yet released an official list of eligible vehicles and models.

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“I will make interest on car loans completely tax deductible,” Trump said at a campaign rally in North Carolina in October 2024.

“I would only do it if they built that particular product — the car — in the United States,” he added.

The Treasury Department and IRS did not immediately respond to FOX Business’ request for comment.