What the deduction is
- Individuals who purchase a new vehicle (for personal use, not fleet or commercial) on or after January 1, 2025 (and through December 31, 2028) may deduct up to $10,000 of interest paid on the auto loan each tax year. Vehicle must have its final assembly in the United States
- Vehicle must weigh less than 14,000 pounds gross vehicle weight rating (meaning regular passenger / light vehicles: cars, motorcycles, vans, SUVs, pickups) and have at least two wheels.
- The taxpayer’s modified adjusted gross income (MAGI) cannot exceed certain thresholds: for single filers ~$100,000; for married filing jointly ~$200,000. The deduction phases out for incomes above these thresholds and ends at ~$150,000 / ~$250,000 respectively.
- The vehicle must be new, not used, and purchased for personal (not business) use.
Why it matters: Because the assembly must be in the U.S., even if the brand is “foreign,” the model qualifies if the final assembly is U.S.-based. This is intended to promote domestic manufacturing.
Which vehicles appear to qualify
There is not yet a fully official IRS list publicly updated (or at least easily found) of every model that qualifies via final U.S. assembly. But multiple sources have compiled lists of vehicles whose final assembly occurs in the U.S., and so are likely eligible.
Here are examples of vehicles frequently cited as meeting the U.S. final-assembly requirement:
- Honda Accord — assembled in Ohio.
- Honda Civic Hatchback — assembled in Indiana.
- Toyota Camry — assembled in Kentucky.
- Toyota Corolla — assembled in Mississippi (for certain versions).
- Chevrolet Bolt EV — assembled in Michigan.
Key things to watch
- Check the specific trim/model: Even within a model line, assembly location can differ. For instance the hybrid version of the Toyota Corolla may be assembled abroad, thus not qualifying, whereas a U.S.-assembled version might.
- New purchase only: Used vehicles don’t qualify.
- Personal, not business use: The deduction is for vehicles purchased for personal use only (not commercial/fleet).
- Income phase-out: If your MAGI is too high, the deduction phases out or is eliminated.
- Verify final assembly & VIN: Because the rule depends on “final assembly in the U.S.” you may need to check the vehicle’s VIN or manufacturer/disclosure to confirm.
- Weight limitation: Vehicles over 14,000 pounds gross weight do not qualify under the typical “light vehicle” threshold.
- Timing: The deduction is effective starting tax year 2025 (for vehicles purchased in 2025) until 2028.
