TAX DEDUCTION: If you make $100K or less ($200K filing jointly) and have a car loan you can deduct $10,000 in interest under Trump’s new budget

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The latest budget proposal from President Trump includes a major tax break for vehicle owners, allowing individuals earning $100,000 or less to deduct up to $10,000 in car loan interest. Joint filers making under $200,000 also qualify, making this one of the most significant tax benefits aimed at middle-class Americans in recent years.

The deduction applies to personal-use vehicles, covering cars, trucks, SUVs, motorcycles, and even campers. To qualify, the loan must be secured with a first lien, meaning the lender holds primary claim in case of default. Refinancing is permitted, but only if the new loan does not exceed the original balance.

Unlike traditional itemized deductions, this benefit operates above the line, meaning taxpayers can claim it alongside the standard deduction. This structure expands eligibility, allowing more Americans to take advantage of the savings without needing to itemize.

Sources:

https://gearmusk.com/2025/05/23/trump-car-loan-tax-deduction/

https://www.crfb.org/build-your-own-tax-extensions

https://www.bloomberg.com/graphics/2018-tax-plan-consequences/