I am working to make everyday expenses more affordable for families across Wisconsin’s Third District. A new tax deduction will soon help reduce the cost of purchasing a personal vehicle by allowing taxpayers to deduct interest paid on qualifying car loans. Here’s what you need to know:

No Tax on Car Loan Interest (2025-2028)

New deduction: Interest paid on a loan for a qualified personal-use vehicle can be deducted from your taxes.

Up to $10,000 annually: Maximum deduction per year for eligible taxpayers.

Income limits: Phases out for incomes over $100,000 ($200,000 for joint filers).

New vehicles only: Must be the first owner; used vehicles and leases do not qualify.

Loan requirements:

• Originated after December 31, 2024
• Used to purchase a vehicle
• For personal (not business) use
• Secured by a lien on the vehicle
• Refinanced loans may still qualify for interest deduction

Vehicle eligibility: Cars, SUVs, vans, pick-ups, and motorcycles under 14,000 lbs that have undergone final assembly in the United States.

• To determine if the vehicle has undergone final assembly in the U.S., taxpayers may look at the vehicle’s plant of manufacture as reported in the vehicle identification number (VIN)

Easy to claim: Deduction is available for both itemizing and non-itemizing taxpayers. Just include the vehicles VIN on your tax return.

This deduction is designed to make it easier for families to afford reliable transportation while supporting American manufacturing.

As always, our office is here to help. If you have questions about federal tax policy or need assistance navigating government resources, please don’t hesitate to call my office in the District or in Washington.
Washington, D.C. Office: (202) 225-5506

La Crosse Office: (608) 782-2558

Eau Claire Office: (715) 831-9214