Federal Auto Loan Interest Deduction (2025-2028)
| Service | ||
| Day | Open | Closed |
| Monday | 7:00AM | 6:00PM |
| Tuesday | 7:00AM | 6:00PM |
| Wednesday | 7:00AM | 6:00PM |
| Thursday | 7:00AM | 6:00PM |
| Friday | 7:00AM | 6:00PM |
| Saturday | 8:00AM | 5:00PM |
| Sunday | Closed | Closed |
No Tax on Car Loan in Heath, OH
At Coughlin Nissan of Heath, we know that purchasing a car—whether it’s your first or your next—is an exciting milestone. As a trusted Nissan dealer and provider of quality used vehicles in Heath, OH, we are committed to making your car-buying experience seamless and enjoyable. This guide is designed to walk you through every step of the process, from exploring your options and setting a realistic budget to understanding key automotive terms and navigating the dealership experience. With our expert guidance and dedication to customer satisfaction, you’ll have the confidence to make informed decisions and drive home in the perfect vehicle for your lifestyle.
How does the Auto Loan Interest Deduction work?
Under federal tax law (H.R. 1), eligible buyers may deduct up to $10,000 per tax year in interest paid on a qualifying auto loan for a new personal vehicle that was final-assembled in the United States.
Up to $10,000 in Annual Interest Deductions
Eligible buyers can deduct up to $10,000 per year in auto loan interest from their taxable income, which may help reduce their overall tax liability.
United States-Assembled Vehicles Only
To qualify for this deduction, the vehicle must be assembled in the United States, supporting domestic manufacturing and American jobs.
Available for Tax Years 2025–2028
This deduction applies to interest paid during tax years 2025 through 2028 on qualifying new auto loans originated after December 31, 2024.
Who Is Eligible?
To qualify for the federal auto loan interest deduction, buyers must meet several requirements:
- New Vehicle Purchase: The vehicle must be purchased new. Lease payments and used vehicles do not qualify.
- Loan Timing: The auto loan must be originated after December 31, 2024 and secured by a lien on the vehicle.
- Personal Use Only: The vehicle must be for personal use. Business or commercial fleet purchases are not eligible.
- VIN Reporting: The taxpayer must include the Vehicle Identification Number (VIN) of the qualified vehicle on their tax return to claim the deduction.
- Refinanced Loans: If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount generally remains eligible.
- Income Limits: The deduction phases out for individuals with modified adjusted gross income over $100,000 ($200,000 for joint filers).
- Itemizing Not Required: This is an above-the-line deduction, so it can be claimed even if you do not itemize your taxes.
Which Vehicles Qualify?
To be eligible for the auto loan interest deduction, a vehicle must meet specific requirements:
- Vehicle Type: Cars, minivans, vans, SUVs, pickup trucks, and motorcycles with a gross vehicle weight rating under 14,000 pounds.
- New Purchase: Only vehicles purchased new qualify. Used vehicles are not eligible.
- Personal Use: The vehicle must be used for personal purposes—business or fleet vehicles do not qualify.
Final Assembly in the U.S.: The vehicle must have undergone final assembly in the United States, supporting domestic manufacturing and jobs.
Final assembly can be confirmed via the vehicle label at the dealer or by checking the plant of manufacture in the VIN.
The NHTSA VIN Decoder website provides guidance on verifying U.S. assembly.
- Nissan Examples: Eligible models for Coughlin Nissan of Heath include the Altima, Frontier, Murano, Pathfinder, LEAF (2025 and earlier), and most Rogue models.
Income-Based Deduction Limits
Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
The taxpayer must include the Vehicle Identification Number (VIN) of the qualified vehicle on the tax return for any year in which the deduction is claimed.
- Reporting: Lenders or other recipients of qualified interest must file information returns with the IRS and furnish statements to taxpayers showing the total amount of interest received during the taxable year.
- Guidance: The IRS will provide transition relief for tax year 2025 for interest recipients subject to the new reporting requirements.
- Nissan models with final assembly in the United States: Nissan Altima, Frontier, Murano, Pathfinder, LEAF (2025 model year and earlier), and most models of Nissan Rogue. Please utilize the information and tools above to confirm vehicle eligibility.
Frequently Asked Questions
No. The federal auto loan interest deduction applies only to interest paid on a new auto loan. Lease payments are not eligible.
No. Only new vehicles purchased for personal use qualify for this deduction.
Eligible vehicles include cars, SUVs, pickup trucks, vans, minivans, and motorcycles with a gross vehicle weight rating under 14,000 pounds that were final-assembled in the U.S.
Yes. Interest paid on a refinanced qualifying auto loan generally remains eligible.
No. This is an above-the-line deduction, so you can claim it even if you do not itemize.
Yes. The deduction phases out for individuals with modified adjusted gross income over $100,000 ($200,000 for joint filers).
Include the Vehicle Identification Number (VIN) on your tax return. You can also verify assembly in the U.S. via the dealer or the NHTSA VIN Decoder.
Eligible models include the Altima, Frontier, Murano, Pathfinder, LEAF (2025 and earlier), and most Rogue models. Always confirm eligibility with VIN verification.