President Donald Trump’s tax deduction for interest on car loans has not gained as much traction as expected, with tax filing season now in the rearview.
The details: Early reports (two days before the April 15 tax deadline) showed that only about 1.1 million taxpayers had taken advantage of the new deduction, far below earlier projections, Politico reported.
The measure allows buyers to deduct up to $10,000 in loan interest per year from 2025 through 2028 for qualified vehicles made in the U.S.
Income must be below $100,000 for single filers or $200,000 for married couples filing jointly for full eligibility, with the deduction phasing out completely above $149,000 and $249,000, respectively.
What they’re saying: “We’re seeing lower-than-expected uptake,” said Andrew Lautz, director of tax policy at the Bipartisan Policy Center, per Politico.
Why it matters: The weak early response suggests the deduction may not be the near-term sales tailwind some had hoped for, even amid persistently high new-vehicle costs.
Between the lines: The low number of filings tied to the auto loan deduction could also reflect confusion around the U.S.-assembly rules, Lautz said, along with the income limits.
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Eligible vehicles must have been purchased after Dec. 31, 2024, financed with a loan, and have final assembly in the U.S.
Only about 6 million vehicles meet all of the criteria, according to the IRS, per Politico.
“I’m wondering if there’s confusion over the Made-in-the-U.S.A. requirement,” said Lautz.
Bottom line: The deduction may still offer value for some buyers, but its narrow eligibility appears to be limiting its real-world impact, making it likely more of a niche selling point than a broad affordability tool.
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