For tax years 2025 through 2028, taxpayers may deduct up to $10,000 of interest paid (subject to limitations and phaseouts) on a loan used to purchase a qualifying passenger vehicle for personal use under a temporary provision in §163(h)(4). To qualify, the loan must be incurred after December 31, 2024, secured by a first lien on the vehicle, and the taxpayer must report the
vehicle identification number (VIN) on their return. Refinanced loans also qualify, but only up to the amount of the original principal. The vehicle must also meet the Clean Air Act definition of a motor vehicle and be assembled in the United States. Several exclusions apply.
Easy Tax Service in Prescott Valley can help if you have any questions about deducting car loan interest. Our tax preparers have over fifty years of combined experience preparing taxes. Easy Tax Service is open year-round and committed to providing high-quality tax preparation. Please give us a call at 928-775-7000 to schedule an appointment today.