OBBBA Car Interest Deduction: 2025 Filing Guide & Cash Savings Table
Guide: One Big Beautiful Bill (OBBBA) Auto Loan Interest Deduction
Important Note: The common social media claim that "any car from 2023" qualifies is False. Only loans started on or after January 1, 2025 qualify. Interest on older loans is not deductible.
What "Above-the-Line" Means for You
This is a rare "double benefit" adjustment. It reduces your Modified Adjusted Gross Income (MAGI) before other credits are calculated. This lower MAGI helps you keep more of the $2,200 Child Tax Credit and other income-based benefits.
Potential Cash Savings (2025 Tax Year)
| Interest Paid |
12% Bracket Savings |
22% Bracket Savings |
| $3,000 |
$360 off taxes |
$660 off taxes |
| $6,000 |
$720 off taxes |
$1,320 off taxes |
| $10,000 (MAX) |
$1,200 off taxes |
$2,200 off taxes |
Detailed Phase-Out Schedule:
If your income exceeds the limits, your deduction is reduced by $200 for every $1,000 of income above the threshold.
| Single MAGI |
Married Joint MAGI |
Max Deduction Allowed |
| Up to $100,000 | Up to $200,000 | $10,000 |
| $110,000 | $210,000 | $8,000 |
| $120,000 | $220,000 | $6,000 |
| $130,000 | $230,000 | $4,000 |
| $140,000 | $240,000 | $2,000 |
| $150,000+ | $250,000+ | $0 |
Filing With Your Relationship Manager
To accurately assess your eligibility and claim this deduction on your 2025 tax return, please upload the following to your portal:
- IRS Form 1098-V: Sent by your lender by Jan 31, 2026.
- Dealer Bill of Sale: Verifies the purchase date and "New" status.
- Vehicle VIN: Required for mandatory reporting on Schedule 1-A.
- Loan Origination Document: To confirm the loan started after Dec 31, 2024.
Pro Tip: Buying a "leftover" 2024 model? It still qualifies as long as it has never been titled and your loan starts in 2025!
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