Guide to the 2025 Auto Loan Interest Tax Deduction
Under the One Big Beautiful Bill Act (OBBBA), taxpayers can now deduct interest paid on loans for certain new vehicles. This is a significant shift in tax policy designed to incentivize domestic manufacturing and provide middle-class tax relief for tax years 2025 through 2028.
Most Searched Terms & Frequently Asked Questions
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"Is my car loan interest tax deductible in 2025?"
Yes, provided the vehicle is purchased new, is assembled in the United States, and your income falls within the established limits. -
"How to find vehicle assembly location from VIN?"
The first character of the Vehicle Identification Number (VIN) indicates the country of origin. To qualify for the deduction, the VIN must generally start with 1, 4, or 5 (USA). -
"What are the 2025 income limits for auto interest deduction?"
The deduction begins to phase out for single filers earning over $100,000 and joint filers earning over $200,000.
Eligible Vehicles at Mentor Nissan
For drivers in Mentor, OH and Lake County looking to take advantage of this tax break, Mentor Nissan offers several popular models that meet the strict "U.S. Assembled" criteria:
- Nissan Rogue & Pathfinder: Proudly assembled in Smyrna, Tennessee.
- Nissan Altima & Frontier: Manufactured at the Nissan plant in Canton, Mississippi.
- 2025 Nissan Murano: Also assembled in the U.S. and eligible for deduction.
Note: Models like the Nissan Sentra, Versa (assembled in Mexico), and the Nissan Z or Ariya (assembled in Japan) do not currently qualify for the OBBBA interest deduction.
Visit Mentor Nissan: 6960 Center St, Mentor, OH 44060. Our finance team can help you verify the specific VIN of your new vehicle to ensure it meets all OBBBA requirements.
Quick Eligibility Checklist
| Requirement | Condition |
|---|---|
| Vehicle Status | Must be New (First Title) |
| Manufacturing | U.S. Assembled (VIN 1, 4, or 5) |
| Deduction Type | Above-the-line (No itemization required) |
| Annual Cap | Up to $10,000 in interest per year |
How to Claim the Deduction
When filing your 2025 taxes, you will need your vehicle's VIN and interest statements from your lender. This is an "above-the-line" deduction, which reduces your Adjusted Gross Income (AGI) directly—even if you take the standard deduction.
Important Disclaimer: Eligibility is VIN-specific. Always verify the final assembly point on the vehicle's window sticker before purchase. Consult with a tax professional regarding your specific eligibility.