New Auto Loan Interest Tax Deduction: What METRO Members Should Know

If you’re planning to buy a new vehicle—or already purchased one this year—there’s good news. A new federal tax provision may allow you to deduct interest paid on qualifying new auto loans, potentially lowering your tax bill.

This benefit comes from the One, Big, Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, and applies beginning with the 2025 tax year.

Below, we break down what the deduction is, who may qualify, and what you’ll need when tax time arrives.

What Is the New Auto Loan Interest Deduction?

Starting in 2025, eligible taxpayers may be able to deduct interest paid on certain new, personal-use vehicle loans—even if they don’t itemize deductions.

Key points to know:

Available for tax years 2025–2028
Applies only to new vehicles, not used
Does not change your loan rate, payment, or terms
Simply outlines potential tax implications related to interest paid

Who May Qualify?

To qualify for the deduction, both the loan and the vehicle must meet IRS requirements.

Loan Requirements

Loan originated after December 31, 2024
Loan is secured by a lien on the vehicle
Vehicle is used for personal purposes only

Vehicle Requirements

New vehicle only (used vehicles do not qualify)
Purchased on or after January 1, 2025
Final assembly occurred in the United States
Gross Vehicle Weight Rating (GVWR) under 14,000 pounds

Eligible vehicle types may include:

Cars
Minivans and vans
SUVs
Pickup trucks
Motorcycles

Vehicles That Do Not Qualify

Leases
Used vehicles
Business or commercial-use vehicles

How Much Can Be Deducted?

Up to $10,000 per year in qualified auto loan interest
The deduction phases out for higher-income earners:
- $100,000 (single filers)
- $200,000 (joint filers)

What METRO Members Should Know

METRO Federal Credit Union cannot determine or certify vehicle eligibility
The IRS does not require or provide a special tax form (such as a 1098) for this deduction
Your December loan statement shows the total interest paid for the year, which may be helpful when working with a tax professional

Frequently Asked Questions (FAQ)

Do I have to itemize deductions to claim this?

No. This deduction may be available even if you take the standard deduction.

Where can I find the interest I paid on my auto loan?

Your total interest paid for the year can be found on your December statement or by viewing your loan details in online or mobile banking.

What documents will I need when filing my taxes?

You may need:

Your year-end loan statement
Your vehicle’s VIN (Vehicle Identification Number)
Documentation showing the loan and vehicle meet IRS requirements

Where can I find my VIN?

Your 17-digit VIN is typically located:

On the dashboard, visible through the driver-side windshield
On the driver-side door frame label
On your auto insurance policy
On your vehicle registration
On your purchase paperwork

How do I check if my vehicle was assembled in the U.S.?

You can use the official NHTSA VIN Decoder Tool to check the plant of manufacture.

For privacy and liability reasons, METRO Federal Credit Union cannot check or verify VIN eligibility for members.

Will METRO Federal issue a tax form for this deduction?

No. The IRS has not created a specific form for auto loan interest deductions, and one is not required.

Does this change my loan rate or payment?

No. This law does not affect your loan’s rate, payment amount, or terms—only potential tax treatment of interest paid.

Can METRO Federal help me decide if I qualify?

While we can help you access your loan documents or statements, we cannot determine eligibility or provide tax advice. Please consult a qualified tax professional or visit irs.gov for full guidance.

Need Help Accessing Your Information?

Our team is happy to assist you with:

Finding your December statement
Accessing loan details in digital banking
General questions about your account

Reminder: METRO Federal Credit Union is not a tax advisor. Tax rules and eligibility may vary based on individual circumstances. Always consult a qualified tax professional for personalized advice.