Tax Deduction
Whether you've purchased a new vehicle already this year, or are shopping for your next one now, the Vehicle Interest Deduction can help you save money on your federal taxes. This deduction allows qualified buyers to deduct up to $10,000 in interest on auto loans for specific vehicles, but not all vehicles qualify.
As your trusted Portage Chrysler Dodge Jeep Ram dealership, we’re here to help you understand what this means for you and help you make well-informed purchase decisions.
Under a new federal tax law signed in July 2025, the Vehicle Interest Deduction allows buyers to deduct up to $10,000 per year of interest paid on auto loans for qualifying new vehicles. This deduction applies to new 2025-2028 model cars and trucks that have been assembled in the United States and were purchased between January 1st, 2025 through December 31st, 2028.
To take advantage of this deduction, you need to meet these criteria:
- Purchase a new vehicle, model year 2025 or later, between January 1st, 2025 and December 31st, 2028
- Not eligible: used vehicle purchases
- Finance the vehicle with a loan
- Not eligible: cash purchases or leased vehicles
- The vehicle must be for personal use
- Not eligible: vehicles purchased for business or commercial use
- The vehicle’s final assembly must occur in the U.S.
- Not sure? Let us check the VIN for you - for free!
- For full benefit, your Adjusted Gross Income (AGI) should be:
- below $100,000 for individuals or
- below $200,000 for joint filers
- the deduction phases out by 20% over these limits, and fully phases out at $150,000 / $250,000
Did you purchase your vehicle earlier this year? Let's check your eligibility! We can help you navigate the requirements and see if you qualify for this exciting new deduction.
In general, all cars and trucks model year 2025 and later assembled in the U.S. qualify, as long as they have a Gross Vehicle Weight Rating (GVWR) of less than 14,000 pounds. Here at Portage Chrysler Dodge Jeep Ram, that may include:
- Jeep Wrangler
- Jeep Gladiator
- Jeep Wagoneer
- Jeep Grand Cherokee
- Ram 1500
- Ramcharger
- Dodge Durango
- ...and more!
Tip: if the VIN starts with 1, 4, or 5 - you're good to go! But, if you’re still unsure whether a vehicle qualifies, feel free to reach out to us. We are here to help verify eligibility so you can continue with your purchase with confidence.
When you finance your qualifying new vehicle:
- Make sure to get the Vehicle Identification Number (VIN) – you’ll need this for your tax return.
- Keep records of your loan interest payments.
- Work with a tax professional to claim up to $10,000 of deductible interest on your 2025-2028 federal taxes.
If you’re shopping for a new, U.S. assembled vehicle with great financing options, look no further! Visit our Portage Chrysler Dodge Jeep Ram dealership to test drive qualifying Dodge, Jeep, Ram, and other models that may be eligible for the Vehicle Interest Deduction.
While you're here, our sales and financing experts will help:
- Confirm your vehicle of choice qualifies for the deduction
- Right-fit you with the best financing options available that work with the new deduction
- Understand your tax deduction options
New Auto Loan Interest Deduction*
- Qualifying taxpayers may deduct up to $10,000 in interest annually on loans for eligible, new, personal-use vehicles with final assembly that occurred in the U.S.
- Applies to EV and ICE vehicles purchased between January 1, 2025, and December 31, 2028
- VINs starting with 1, 4, or 5 typically indicate U.S. final assembly.
*For taxable years beginning after December 31, 2024, and before January 1, 2029, Section 163(h)(4) of the Internal Revenue Code of 1986, as amended, permits qualifying taxpayers to deduct interest paid or accrued during the taxable year on indebtedness incurred by the taxpayer after December 31, 2024, for the purchase of new qualifying vehicles, for personal use, with final assembly in the United States. Limitations may apply where a dealer has previously used a vehicle as a courtesy transportation vehicle. Personal eligibility to claim this deduction depends on the customer's own individual circumstances, including whether modified adjusted gross income exceeds the income thresholds contained in Section 163(h)(C)(ii). If customer qualifies, this deduction may be available irrespective of whether customer chooses to itemize deductions. Additional limitations apply, including a maximum amount of interest permitted for deduction in a given year. Customers should be directed to consult with their own tax, accounting, or legal professional or advisor to confirm eligibility for this deduction or if they have questions regarding their qualification to claim the deduction. This information does not constitute tax, accounting, or legal advice. Offer and dealer available inventory are subject to change.