New Vehicle Loan Interest Deduction: What You Need to Know About the New Federal Tax Benefit

On July 4, 2025, the One, Big, Beautiful Bill Act (OBBBA) was signed into law, introducing a new tax provision under Section 70203 — No Tax on Car Loan Interest. This legislation allows eligible taxpayers to deduct interest paid on qualifying new vehicle loans for a limited time.

Here’s what Eagle Community Credit Union members should know:

What Is the New Auto Loan Interest Deduction?

Under Section 70203, eligible taxpayers may be able to deduct qualified auto loan interest for tax years 2025 through 2028. This deduction applies only to interest paid on qualifying loans for new vehicles, offering potential tax savings during the first few years of ownership.

Eligibility Requirements

To qualify for the auto loan interest deduction, all of the following conditions must be met:

• New vehicles only
  The loan must be for a new passenger vehicle used for personal purposes.
  Used vehicles do not qualify.

• Purchase date requirement
  The vehicle must be purchased on or after January 1, 2025.

• VIN required
  Borrowers must include the vehicle’s VIN (Vehicle Identification Number) when claiming the deduction on their tax return.

Qualifying Vehicles

Eligible vehicles include:

• Cars

• Minivans

• Vans

• SUVs

• Pickup trucks

• Motorcycles

Additional requirements:

• The vehicle must be assembled in the United States (verified through a VIN lookup).

• The vehicle must have a gross vehicle weight rating (GVWR) under 14,000 pounds.

How to Find Your Interest Paid

If you financed your vehicle through Eagle Community Credit Union, your year-to-date interest paid can be found:

• On your December 31 Credit Union statement, or

• By viewing the specific loan account in online or mobile banking

This information may be helpful when preparing your tax return.

A Friendly Reminder

Tax laws can be complex, and eligibility may vary based on individual circumstances. Eagle Community Credit Union encourages members to:

• Consult a qualified tax advisor, or

• Visit the IRS website and review “No tax on car loan interest (Section 70203)” for full details and eligibility guidelines

Thinking About a New Vehicle?

If you’re planning to buy a new vehicle, financing through Eagle Community Credit Union could help you take advantage of this new tax benefit while enjoying competitive rates and local, member-focused service.

Contact us today or visit our website to learn more about our new vehicle loan options.