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. 
    

State Farm Federal Credit Union advises members to consult their tax advisor or visit the IRS website[CJ1]  “No tax on car loan interest (Sec. 70203)” for full eligibility guidelines.  

 [CJ1]One, Big, Beautiful Bill provisions | Internal Revenue Service