Understanding the New Auto Loan Interest Deduction Under the One, Big, Beautiful Bill Act (OBBBA)

On July 4, 2025, the OBBBA was signed into law, introducing a tax benefit under Section 70203 — No Tax on Car Loan Interest.

What You Need to Know:

• Tax Deduction: Taxpayers may be able to deduct qualified auto loan interest per year for tax years 2025 through 2028.

Eligibility Requirements:

• The interest must be paid from a loan on a new passenger vehicle used for personal purposes (used vehicles do not qualify).
• Vehicle was purchased on or after January 1, 2025.
• Borrowers must include their vehicle’s VIN (Vehicle Identification Number) when claiming the deduction.

Qualifying Vehicles:

• Cars, minivans, vans, SUVs, pickup trucks, and motorcycles.
• Must be assembled in the United States (Vin Lookup).
• Must have a gross vehicle weight rating under 14,000 pounds.

Interest Paid Information:

• Your total interest paid year to date for your qualifying vehicle is found on your December 31 Credit Union statement or under the specific loan account(s) in online & mobile banking.

Federal legislation enacted last spring allows qualifying persons a tax deduction for interest paid on loans for certain new vehicles purchased after 12/31/24.1st Mississippi Federal Credit Union provides year to date interest information on all consumer loans on your December 31 statement. Not all vehicles or individuals qualify for a tax deduction. See your tax advisor for details. You can also visit the IRS website.