Auto Loan Tax Deduction (2025–2028) – Disclaimers & Vehicle Qualification

- IRS will provide transition relief for tax year 2025 for taxpayers and employers subject to new
reporting requirements.
- Deduction phases out for taxpayers with modified adjusted gross income (MAGI) over $150,000 (joint:
$300,000).
- Must include Social Security Number on tax return and provide reporting information to IRS/SSA.
- Taxpayer must retain records showing eligibility and provide information if requested by IRS.

- Qualified Vehicle Requirements:
• Must be a car, minivan, SUV, pickup truck, or motorcycle.
• GVWR under 14,000 lbs.
• Final assembly must be in the U.S.
• Only applies to new loans originated after December 31, 2024.
• VIN must be reported on tax return.
• Loan must be first lien only (leases and second mortgages excluded).
• Personal use only — fleet, commercial, or business vehicles not eligible.
- Refinancing allowed only up to original principal; must remain secured by same vehicle.
- Related party loans are not eligible.

- Annual deduction limit: up to $10,000 per year.
- Income phaseouts: deduction reduced $200 per $1,000 of MAGI over $100,000 (single) or $200,000
(joint); fully phased out at $150,000 / $250,000.
- Deduction is temporary — applies only to tax years 2025 through 2028.

- Vehicle eligibility list is subject to change — confirm with latest IRS guidance.
- IRS transition relief applies for employers/payers adjusting to new reporting rules.

- Leased vehicles and used vehicles do not qualify.
- Vehicles with salvage titles or purchased for parts are excluded.
- Deduction cannot be used for business/fleet vehicles unless under specific provisions.
- IRS may audit eligibility; retain all VIN and loan documentation.