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Ohio Senator Bernie Moreno proposes tax deduction for auto loan interest
This bill aims to make good on a campaign promise President Trump made last October. (3 min. read)
Anna del Villar
April 07, 2025
“Car czar” Sen. Bernie Moreno (R-OH) is quickly becoming a crucial figure in President Trump’s vision to overhaul the auto industry.
Driving the news: Moreno, a freshman Republican and former auto dealer, introduced the USA CAR Act, which would let buyers of U.S.-assembled vehicles deduct the interest paid on qualifying auto loans.
The bill amends Section 163(h) of the tax code—the same section that covers mortgage interest.
The deduction would apply to loans issued on or after January 1, 2025.
Eligible vehicles must have final assembly in the United States.
For context: This bill aims to make good on a campaign promise President Trump made last October.
What they’re saying: “For decades, the American auto sector has been devastated by bad trade deals and bad leaders, who shipped American manufacturing jobs overseas while flooding our market with cheap foreign cars. Thanks to President Trump, we are finally ensuring every car sold in America is made in America and that working Americans can actually afford to buy a car in the first place. I’m proud to lead the way in the Senate,” said Senator Moreno.
Why it matters: Moreno’s proposal lands at a time when car affordability is under serious strain. Interest rates remain elevated, vehicle prices are still high, and new auto tariffs could push costs even further.
According to Edmunds, new car buyers paid over $9,200 in loan interest on average during the first quarter of 2025.
With buyers stretching loan terms just to keep monthly payments manageable, even a modest tax deduction could potentially help.
Yes, but the bill does not specify whether the deduction would be above-the-line (like student loan interest) or below-the-line (like mortgage interest).
Its placement in Section 163(h) suggests it may follow itemized deduction rules, but that has not been confirmed.
If treated as a below-the-line deduction, only taxpayers who itemize (and exceed the standard deduction) could claim it—roughly 10% of filers, based on current IRS data.
If lawmakers amend the bill to make it above-the-line, it would be available to a much larger share of consumers.
Bottom line: The broader effects of the USA CAR Act will depend heavily on how the deduction is ultimately structured, and how many Americans it realistically reaches. For now—the bill still has to make its way through Congress.
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