PLANNING TO BUY A CAR
What's new: Effective for tax years 2025 through 2028, you may deduct interest paid on auto loans from your AGI. This includes refinanced auto loans as long as the refinanced amount does not exceed the debt remaining on the prior loan, and the vehicle was bought in 2025 or later.
*Requirements:* The vehicle must be new…purchased for personal use, not business…and must have undergone final assembly in the US. It's expected that the IRS will issue a list of qualifying vehicles, or it may say that consumers must rely on manufacturers' certifications.
The maximum annual deduction is $10,000, and the deduction phases out for taxpayers with MAGIs of more than $100,000 (individuals) and $200,000 (married filing jointly).
What to do: You can take this deduction whether you choose to itemize deductions on your income tax return or take the standard deduction.
Alert: Under the OBBBA, tax credits for buying an electric vehicle (EV) expired September 30, 2025. That includes the $7,500 incentive for buying a new EV or $4,000 for a used one. The credit for buying and installing a home charging station ends June 30, 2026.
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