USA CAR Act

This bill lets people deduct the interest they pay on certain car loans from their taxable income, even if they take the standard deduction. The loan must be used to buy a car and be secured by that car. The car has to be assembled in the United States and meet the federal definition of an automobile. This applies to individuals, not corporations.

To qualify, the loan must be taken out on or after January 1, 2025. The deduction applies to interest paid on loans taken out on or after the date the law takes effect.

• Who is affected: Individual taxpayers (not corporations) with auto loans secured by the car.
• What changes: You can subtract qualifying car-loan interest from your income without itemizing deductions.
• Which cars qualify: Automobiles assembled in the U.S. by a manufacturer, as defined in federal law.
• When it starts: For loans taken out on or after the law’s effective date; loans must be dated January 1, 2025 or later to count.