A recent change in federal tax law now allows eligible borrowers to deduct interest paid on certain vehicle loans for tax years 2025 through 2028. This deduction can help reduce taxable income and may result in meaningful savings at tax time. As with any tax provision, specific requirements apply. We’ve broken down key details for our members so you can understand the specifications that surround this new law.
Overview of the Deduction
- The deduction applies to interest paid on loans used to purchase a qualified new vehicle for personal use.
- Maximum annual deduction is $10,000.
- The benefit begins to phase out for taxpayers with modified adjusted gross income above $100,000 ($200,000 if filing jointly) and is fully phased out at higher income levels.
Loan Requirements
To be eligible, the loan must meet all the following conditions:
- Originated after December 31, 2024
- Used to purchase a new vehicle (loans for pre-owned vehicles are not eligible under this provision)
- For personal use only (business or commercial-use loans do not qualify)
- Secured by a lien on the vehicle
What is a Qualified Vehicle?
A qualified vehicle is a new car, truck, minivan, van, SUV, or motorcycle that meets two main criteria:
- Gross Vehicle weight rating of less than 14,000 pounds
- Final assembly completed in the United States
Members can verify the final assembly location by entering the Vehicle Identification Number (VIN) into the free VIN decoder tool on the National Highway Traffic Safety Administration website https://www.nhtsa.gov/vin-decoder.
How to Find the Interest Amount
The IRS has not yet created a dedicated tax form (similar to Form 1099/1098) for this deduction. If you have an NUFCU vehicle loan that meets the requirements, the total interest paid during the year will appear on the December 2025 statement as “Loan Interest Year-to-Date” in the vehicle loan section. This is the figure to use when claiming the deduction.
Important Reminder
Tax situations vary, and eligibility ultimately depends on individual circumstances. NUFCU strongly recommends consulting a qualified tax professional to confirm how this deduction applies and to ensure accurate reporting.
If you have any questions about your loan or need assistance locating the year-to-date interest amount on your statement, the NUFCU team is ready to help. Contact us anytime at 402-472-2087.
