Treasury Moves Forward with Trump’s Car Loan Interest Tax Break, According to Bessent
FOX Business’ Max Gorden joins ‘Varney & Co.’ to break down President Donald Trump’s push for tiny Kei cars to be built in America and whether U.S. drivers are ready to downsize.
The Treasury Department is rolling out President Donald Trump’s ‘No Tax on Car Loan Interest’ policy, aimed at reducing costs for American families. Treasury Secretary Scott Bessent announced this initiative on Wednesday.
This policy, part of Trump’s “One, Big, Beautiful Bill,” allows eligible taxpayers to deduct up to $10,000 annually in car loan interest for new, U.S.-assembled vehicles purchased between 2025 and 2028.
Bessent emphasized, “Treasury is implementing President Trump’s No Tax on American Car Loan Interest, putting money back in the pockets of working and middle-class families.” He noted that eligible taxpayers can deduct up to $10,000 per year in auto loan interest, regardless of whether they itemize or take the standard deduction.
THE “BIG, BEAUTIFUL, BILL” INCLUDES A CAR LOAN INTEREST TAX DEDUCTION. DO YOU QUALIFY?
Treasury Secretary Scott Bessent said Wednesday it is implementing President Donald Trump’s ‘No Tax on Car Loan Interest’ policy. (Eric Lee/Bloomberg via Getty Images / Getty Images)
Bessent further stated that the Treasury Department and the Internal Revenue Service (IRS) are providing clear guidance to ensure taxpayers understand how the deduction works. “For millions of Americans, a car isn’t a luxury; it’s essential for work, school, and childcare,” he added. “This deduction helps lower monthly costs and makes car ownership more affordable when families need it most.”
The tax break is exclusively for vehicles assembled in the U.S., a move intended to bolster American workers. “The tax cut supports American workers by applying solely to U.S.-assembled vehicles, thereby strengthening domestic manufacturing,” Bessent noted.
AUTO LOAN INTEREST DEDUCTION IN ‘BIG BEAUTIFUL BILL’
The tax break applies exclusively to vehicles assembled in the U.S. (iStock / iStock)
Signed into law on July 4, the “One Big Beautiful Bill” includes specific requirements for the auto loan interest deduction. It applies only to new cars, SUVs, vans, pickup trucks, and motorcycles weighing under 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 occur in the U.S. Final assembly refers to the process where major components of a vehicle—engine, transmission, body, and chassis—are fully integrated and completed at a U.S.-based manufacturing facility, as explained by automotive expert Lauren Fix.
Additionally, buyers must be the vehicle’s first owner, and the loan must be secured by a lien against it, according to Kelley Blue Book.
AMERICANS WILL GET ‘GIGANTIC’ TAX REFUND NEXT YEAR, TREASURY SECRETARY SAYS
The policy was enacted as part of Trump’s “One, Big, Beautiful Bill.” (Yuri Gripas/Abaca/Bloomberg via Getty Images / Getty Images)
The deduction will gradually decrease for higher earners, phasing out for individuals making over $100,000 annually and joint filers earning more than $200,000.
As of now, the IRS has not released an official list of qualifying vehicles and models.
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“I will make interest on car loans fully tax deductible,” Trump stated at a North Carolina campaign rally in October 2024, according to Reuters. He added, “I am only going to do it if they build that particular product—namely an automobile—in the United States.”
The Treasury Department and IRS have yet to respond to FOX Business’ request for further comment.
FOX Business’ Max Gorden joins ‘Varney & Co.’ to break down President Donald Trump’s push for tiny Kei cars to be built in America and whether U.S. drivers are ready to downsize.
The Treasury Department is rolling out President Donald Trump’s ‘No Tax on Car Loan Interest’ policy, aimed at reducing costs for American families. Treasury Secretary Scott Bessent announced this initiative on Wednesday.
This policy, part of Trump’s “One, Big, Beautiful Bill,” allows eligible taxpayers to deduct up to $10,000 annually in car loan interest for new, U.S.-assembled vehicles purchased between 2025 and 2028.
Bessent emphasized, “Treasury is implementing President Trump’s No Tax on American Car Loan Interest, putting money back in the pockets of working and middle-class families.” He noted that eligible taxpayers can deduct up to $10,000 per year in auto loan interest, regardless of whether they itemize or take the standard deduction.
THE “BIG, BEAUTIFUL, BILL” INCLUDES A CAR LOAN INTEREST TAX DEDUCTION. DO YOU QUALIFY?
Treasury Secretary Scott Bessent said Wednesday it is implementing President Donald Trump’s ‘No Tax on Car Loan Interest’ policy. (Eric Lee/Bloomberg via Getty Images / Getty Images)
Bessent further stated that the Treasury Department and the Internal Revenue Service (IRS) are providing clear guidance to ensure taxpayers understand how the deduction works. “For millions of Americans, a car isn’t a luxury; it’s essential for work, school, and childcare,” he added. “This deduction helps lower monthly costs and makes car ownership more affordable when families need it most.”
The tax break is exclusively for vehicles assembled in the U.S., a move intended to bolster American workers. “The tax cut supports American workers by applying solely to U.S.-assembled vehicles, thereby strengthening domestic manufacturing,” Bessent noted.
AUTO LOAN INTEREST DEDUCTION IN ‘BIG BEAUTIFUL BILL’
The tax break applies exclusively to vehicles assembled in the U.S. (iStock / iStock)
Signed into law on July 4, the “One Big Beautiful Bill” includes specific requirements for the auto loan interest deduction. It applies only to new cars, SUVs, vans, pickup trucks, and motorcycles weighing under 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 occur in the U.S. Final assembly refers to the process where major components of a vehicle—engine, transmission, body, and chassis—are fully integrated and completed at a U.S.-based manufacturing facility, as explained by automotive expert Lauren Fix.
Additionally, buyers must be the vehicle’s first owner, and the loan must be secured by a lien against it, according to Kelley Blue Book.
AMERICANS WILL GET ‘GIGANTIC’ TAX REFUND NEXT YEAR, TREASURY SECRETARY SAYS
The policy was enacted as part of Trump’s “One, Big, Beautiful Bill.” (Yuri Gripas/Abaca/Bloomberg via Getty Images / Getty Images)
The deduction will gradually decrease for higher earners, phasing out for individuals making over $100,000 annually and joint filers earning more than $200,000.
As of now, the IRS has not released an official list of qualifying vehicles and models.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“I will make interest on car loans fully tax deductible,” Trump stated at a North Carolina campaign rally in October 2024, according to Reuters. He added, “I am only going to do it if they build that particular product—namely an automobile—in the United States.”
The Treasury Department and IRS have yet to respond to FOX Business’ request for further comment.
