Auto Loan Interest Deduction

Auto Loan Interest Deduction

Effective July 4, 2025, the One Big Beautiful Bill Act (OBBBA) introduces significant amendments to federal vehicle incentives, which warrant immediate attention for their potential impact on dealership operations and customer communications.

A new federal auto loan interest deduction allows qualifying customers to save up to $10,000 annually on new vehicle loan interest across all vehicle lines that have undergone final assembly in the United States and have a gross vehicle weight rating (GVWR) of less than 14,000 pounds.

This new federal deduction presents a significant advantage for customers considering a new Ford or Lincoln vehicle. Ford’s longstanding commitment, exemplified by its “Ford For America” campaign, ensures that a substantial portion of its vehicle lineup undergoes final assembly in the U.S. Consequently, many Ford and Lincoln models will qualify for this valuable federal tax deduction, offering a direct financial incentive for choosing domestically produced vehicles.
T3 Fbc Web Stress Free.jpg

Auto Loan Interest Deduction

Effective July 4, 2025, the One Big Beautiful Bill Act (OBBBA) introduces significant amendments to federal vehicle incentives, which warrant immediate attention for their potential impact on dealership operations and customer communications.

A new federal auto loan interest deduction allows qualifying customers to save up to $10,000 annually on new vehicle loan interest across all vehicle lines that have undergone final assembly in the United States and have a gross vehicle weight rating (GVWR) of less than 14,000 pounds.

This new federal deduction presents a significant advantage for customers considering a new Ford or Lincoln vehicle. Ford’s longstanding commitment, exemplified by its “Ford For America” campaign, ensures that a substantial portion of its vehicle lineup undergoes final assembly in the U.S. Consequently, many Ford and Lincoln models will qualify for this valuable federal tax deduction, offering a direct financial incentive for choosing domestically produced vehicles.
T3 Fbc Web Stress Free.jpg

Eligibility

A new federal auto loan interest deduction has been established, offering financial benefits to qualifying customers.

Due to uncertainties surrounding how FCTP vehicles will be treated for purposes of the auto interest deduction, when purchasing a FCTP vehicle a customer should be advised to consult with their tax advisor.

Key provisions of this deduction are as follows:
Deductible

Deductible Amount

Eligible taxpayers may
deduct up to $10,000 in
annual interest paid or
accrued on loans for
qualifying new personaluse vehicles effective for
2025 through 2028.

Applicability

Applicability Period

This deduction applies to
new Electric Vehicles
(EVs), Hybrid vehicles,
and Internal Combustion
Engine (ICE) vehicles with
loans originating between
January 1, 2025, and
December 31, 2028.

Qualifiers

Qualifiers

To qualify for the
deduction, the interest
must be paid or accrued
on a loan that is:
1. originated after
December 31, 2024
2. used to purchase a
vehicle, the original use of
which starts with the
taxpayer (used vehicles do
not qualify)
3. for a personal use
vehicle (not for business
or commercial use) and
4. secured by the first lien
on the vehicle

Us

Vehicle Eligibility –
U.S. Final Assembly

To qualify, vehicles must
have undergone final
assembly in the United
States and and have a
gross vehicle weight rating
(GVWR) of less than
14,000 pounds. See the
following page for a list of
qualifying vehicles.

Cust

Customer Eligibility

Staff should be prepared
to bring awareness to
customers regarding
potential income eligibility
thresholds associated with
this deduction. Deduction
begins to phase out for
taxpayers with modified
adjusted gross income
over $100,000 ($200,000
for joint filers). Eligible
customers can include the
deduction on their Tax
Return.

Deductible

Deductible Amount

Eligible taxpayers may
deduct up to $10,000 in
annual interest paid or
accrued on loans for
qualifying new personaluse vehicles effective for
2025 through 2028.

Applicability

Applicability Period

This deduction applies to
new Electric Vehicles
(EVs), Hybrid vehicles,
and Internal Combustion
Engine (ICE) vehicles with
loans originating between
January 1, 2025, and
December 31, 2028.

Qualifiers

Qualifiers

To qualify for the
deduction, the interest
must be paid or accrued
on a loan that is:
1. originated after
December 31, 2024
2. used to purchase a
vehicle, the original use of
which starts with the
taxpayer (used vehicles do
not qualify)
3. for a personal use
vehicle (not for business
or commercial use) and
4. secured by the first lien
on the vehicle

Us

Vehicle Eligibility –
U.S. Final Assembly

To qualify, vehicles must
have undergone final
assembly in the United
States and and have a
gross vehicle weight rating
(GVWR) of less than
14,000 pounds. See the
following page for a list of
qualifying vehicles.

Cust

Customer Eligibility

Staff should be prepared
to bring awareness to
customers regarding
potential income eligibility
thresholds associated with
this deduction. Deduction
begins to phase out for
taxpayers with modified
adjusted gross income
over $100,000 ($200,000
for joint filers). Eligible
customers can include the
deduction on their Tax
Return.

Eligibility | US -Manufactured Vehicles

The following Ford and Lincoln vehicles have undergone final
assembly in the United States.

US Assembly Plant Vehicles Produced
Michigan Assembly Plant (MAP) Ford Ranger
Ford Bronco
Kansas City Assembly Plant (KCAP) Ford F-150
Ford F -150 Police Responder & SSV
Ford Transit
Ford E -Transit (personal use only)
Kentucky Truck Plant (KTP) Ford Expedition
Ford Expedition MAX
Ford Super Duty
Lincoln Navigator
Lincoln Navigator L
Rouge Electric Vehicle Center (REVC) Ford F -150 Lightning
Chicago Assembly Plant (CAP) Ford Explorer
Ford Explorer Police Interceptor
Lincoln Aviator
Louisville Assembly Plant (LAP) Ford Escape
Lincoln Corsair
Flat Rock Assembly Plant (FRAP) Ford Mustang Coupe/Convertible
Dearborn Truck Plant (DTP) Ford F -150 (Police SSV HEV)
Ford Ev
More Information

Eligibility | US -Manufactured Vehicles

The following Ford and Lincoln vehicles have undergone final
assembly in the United States.

US Assembly Plant Vehicles Produced
Michigan Assembly Plant (MAP) Ford Ranger
Ford Bronco
Kansas City Assembly Plant (KCAP) Ford F-150
Ford F -150 Police Responder & SSV
Ford Transit
Ford E -Transit (personal use only)
Kentucky Truck Plant (KTP) Ford Expedition
Ford Expedition MAX
Ford Super Duty
Lincoln Navigator
Lincoln Navigator L
Rouge Electric Vehicle Center (REVC) Ford F -150 Lightning
Chicago Assembly Plant (CAP) Ford Explorer
Ford Explorer Police Interceptor
Lincoln Aviator
Louisville Assembly Plant (LAP) Ford Escape
Lincoln Corsair
Flat Rock Assembly Plant (FRAP) Ford Mustang Coupe/Convertible
Dearborn Truck Plant (DTP) Ford F -150 (Police SSV HEV)
More Information