One Big Beautiful Bill (OB3) Vehicle Loan Interest Deduction (new)

This is effective for tax years 2025-2028.

New deduction of auto loan interest of up to $10K each year.  This includes motorcycles.  This deduction does not reduce AGI, but it reduces taxable income.  It is an above-the-line deduction, meaning you do not have to itemize to benefit from it.

The vehicle must be purchased new, and has to be purchased in 2025 or later.

It must be a personal use vehicle.  A used purchase vehicle does not qualify for this deduction.

For vehicles that are both personal and business use, this issue has not yet been addressed by IRS.  Another requirement is that the vehicle must have final assembly in the US, and weigh less than 14,000 pound.  You must include the VIN, and you are not required to file a MFJ return if you are married.

Income phaseout begins at $100K(Single) / $200K (MFJ).