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New Vehicle Loan Interest Deduction

Recent federal legislation, commonly referred to as the One Big Beautiful Bill, introduced a new potential tax benefit for members who purchase a new vehicle and finance it with an auto loan.

Important reminder: Bronco Federal Credit Union does not provide tax advice. Eligibility and tax treatment can vary. We strongly encourage all members to consult a qualified tax professional.

What Is the New Vehicle Loan Interest Deduction?

Under the new law, eligible taxpayers may be able to deduct up to $10,000 per year in interest paid on a qualified vehicle loan when filing their federal income taxes.

This deduction applies to new, personal-use vehicles purchased within the eligible timeframe. This deduction is in effect for tax years 2025 through 2028.

Basic Eligibility Guidelines

You may qualify for the deduction if all of the following apply:

• Vehicle Type: Car, SUV, pickup truck, minivan, or motorcycle that is originally purchased and used by the taxpayer
• Vehicle Use: Personal use only (not for business or commercial use)
• Loan Date: Loan originated on or after January 1, 2025
• Weight Limit: Vehicle must have a gross vehicle weight rating (GVWR) under 14,000 pounds
• Final Assembly: Vehicle must have undergone final assembly in the United States (Vin Lookup).

Additional income limits and phase-outs may apply.

Income Limits to Be Aware Of

The deduction is subject to income thresholds:

• Single filers: Phase-out begins at $100,000 modified adjusted gross income (MAGI)
• Joint filers: Phase-out begins at $200,000 MAGI

The deduction gradually decreases as income increases and phases out completely above the maximum limits set by the IRS.

This deduction may be available to both itemizing and non-itemizing taxpayers. A tax professional can help determine how this applies to your tax return.

A tax professional can help determine how this applies to your specific situation.

What You’ll Need at Tax Time

If you qualify, you may need:

• The Vehicle Identification Number (VIN) of the qualifying vehicle
• Information on interest paid during the tax year
• Any tax documents provided by your financial institution

Interest Paid Information: Your total interest paid year to date for your qualifying vehicle is found on your December statement or under the specific loan account(s) in online banking.

Bronco Federal Credit Union will provide applicable loan information as required, but members are responsible for proper tax filing.

Final Reminder

Tax laws are complex and subject to change. This page is intended for educational purposes only and should not be considered tax advice.

Always consult a qualified tax professional to confirm eligibility and understand how this deduction may apply to your individual tax situation.