We know that a lot of tax return changes are coming this year. Just about every one of our clients can take advantage of at least one of them. Those of you thinking of buying a new car this year should know the answer to: What is the Trump New Car Tax Deduction.

1. Who Needs the Trump New Car Tax Deduction?

This benefit allows you to deduct the car loan interest paid on loans for new vehicles purchased between 2025 and 2028. These cars also must meet certain criteria. The deduction is maxed out at $10,000 each year. It may also not apply for single filers earning over $100,000 and married couples who earn $200,000 or more.

To qualify, the new cars must:

  • All cars must be purchased for personal use at least half of the time.
  • The cars must be a new car, SUV, minivan, truck or motorcycle weighing less than 14,000 pounds.
  • All vehicles must have have the “final assembly” performed in the United States.
  • The Vehicle Information Label and VIN number must show that car is eligible.
  • You may use the NHTSA VIN Decoder Tool to find out the location of the manufacturing plant.

Did you know? Approximately 15.5 million new cars were sold in the United States in 2023? The best selling were the Ford F-Series trucks with Toyota and GM coming in second and third. Source: Consumer Affairs

2. Is The Trump New Car Tax Deduction Worth It?

The average cost of a new vehicle in the United States is just over $50,000. Interest rates can go anywhere from 5% to 10%, depending on your credit score, down payment, location, and many other factors. So is it worth it? Let’s say you buy a new car for $50k and get an interest rate of 7%. You will pay about $260 each month in interest. You will be able to deduct about $3,120 of interest per year. We recommend talking to your bookkeeper in order to determine if the deduction is worth it before you buy.

3. Should I Take The Trump New Car Tax Deduction?

Be sure that any new car purchase is within your budget. Those of you looking to buy a new vehicle in the next two years should definitely consider purchasing one that meets the criteria. Be sure not to refinance the vehicle or you will lose the benefit. Make sure your car dealer provides you with the proper verification and documentation in order to make sure your car is eligible for the deduction.

More on What is the Trump New Car Tax Deduction in Houston

This is a new offering and is to be taken advantage of. However, filing for it may be more difficult in the first few years. We recommend you contact us if you live in Houston and want to make the most of this and other new tax credits and deductions.