Auto Loan Tax Deduction: What You Need to Know

If you’re in the Milwaukee area, buying a new car, truck, or SUV just got even more rewarding. Starting in 2025, the federal government is rolling out the Auto Loan Tax Deduction, allowing qualifying drivers to deduct up to $10,000 per year on their taxes when financing a brand-new, U.S.-assembled vehicle. Whether you’re commuting along I-94, heading through Oak Creek or Greenfield, or enjoying a weekend on the Lake Michigan shoreline, this tax break helps you keep more money in your pocket.

At Kunes Buick GMC of Oak Creek, Kunes Buick GMC of Greenfield, and Kunes Hope Chevrolet in Milwaukee, drivers will find plenty of eligible models already on the IRS’s approved list. Popular choices include the GMC Sierra 1500, Buick Enclave, Chevy Silverado 1500, Chevy Equinox, and GMC Acadia — giving Milwaukee-area customers excellent opportunities to save at tax time while upgrading to a brand-new ride.

• You’re buying a new vehicle (cars, SUVs, pickup trucks, minivans, motorcycles).
• The car is assembled in the U.S. and has a VIN you report on your tax return.
• The loan is a first lien auto loan (not a lease, not a refinance beyond your original amount, not a second mortgage).
• It’s for personal use (not business, fleets, or company cars).

• Up to $10,000 per year on your taxes.
• If your income is over certain limits, the deduction phases out:
  • Over $100,000 for individuals.
  • Over $200,000 for couples filing jointly.
  • Fully phased out at $150,000 (single) / $250,000 (joint).

• Used cars or leases (sorry, only brand new).
• Business or fleet vehicles.
• Cars with salvage titles or those bought for parts.
• Loans from family or related parties.

• For auto loans started January 1, 2025 – December 31, 2028.
• After 2028, the deduction is set to expire unless Congress extends it.

• Keep your loan paperwork and VIN info.
• Report the VIN on your tax return.
• Keep proof the car was assembled in the U.S. (IRS provides a list of qualifying vehicles).
• Be ready in case the IRS asks you to show documents.

1. Don’t assume every new car qualifies — check the IRS eligibility list before you buy.
2. Remember: this is a deduction, not a rebate. It lowers your taxable income, not your loan payment.
3. The IRS may audit, so keep your records safe.

Have more questions? See your local tax epert.