President Donald Trump’s tax deduction for interest on car loans has not gained as much traction as expected, with tax filing season now in the rearview.
The details: Early reports (two days before the April 15 tax deadline) showed that only about 1.1 million taxpayers had taken advantage of the new deduction, far below earlier projections, Politico reported.
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The measure allows buyers to deduct up to $10,000 in loan interest per year from 2025 through 2028 for qualified vehicles made in the U.S.
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Income must be below $100,000 for single filers or $200,000 for married couples filing jointly for full eligibility, with the deduction phasing out completely above $149,000 and $249,000, respectively.
What they’re saying: “We’re seeing lower-than-expected uptake,” said Andrew Lautz, director of tax policy at the Bipartisan Policy Center, per Politico.
Why it matters: The weak early response suggests the deduction may not be the near-term sales tailwind some had hoped for, even amid persistently high new-vehicle costs.
Between the lines: The low number of filings tied to the auto loan deduction could also reflect confusion around the U.S.-assembly rules, Lautz said, along with the income limits.
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Eligible vehicles must have been purchased after Dec. 31, 2024, financed with a loan, and have final assembly in the U.S.
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Only about 6 million vehicles meet all of the criteria, according to the IRS, per Politico.
“I’m wondering if there’s confusion over the Made-in-the-U.S.A. requirement,” said Lautz.
Bottom line: The deduction may still offer value for some buyers, but its narrow eligibility appears to be limiting its real-world impact, making it likely more of a niche selling point than a broad affordability tool.
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