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Thanks to the proposed Big Beautiful Bill, you could soon deduct up to $10,000 per year in interest paid on a new car loan, as long as that vehicle’s final assembly occurred in the U.S. (check that the VIN starts with 1, 4, or 5, and confirm on the window sticker).
This deduction is “above the line,” meaning you can still benefit even if you take the standard deduction. The deduction applies to new purchases between 2025 and 2028 but does begin phasing out for individuals making over $100,000 or couples earning over $200,000 per year (Adjusted Gross Income).
To claim the deduction, buyers will need to retain the purchase contract and lender-provided interest statements, then report the information on the forthcoming IRS form for qualified passenger-vehicle loan interest.
| Loan Amount | APR* | Year-1 Interest | Tax Deduction | Estimated Tax Savings† |
| $40,000 | 8.0% | $3,000 | $3,000 | $600 (20% tax rate) |
| $50,000 | 7.5% | $3,750 | $3,750 | $750 |
*APR based on average new car rate (July 2025). †Savings vary by tax bracket; consult a tax pro.
The following Honda vehicles are assembled in the United States and meet the key criteria outlined in the proposed legislation. Buyers who finance these new, personal-use vehicles may be eligible to deduct up to $10,000 per year in loan interest for purchases made between 2025 and 2028.
| Model | Trim Range | Assembly Plant |
| Honda Accord | LX, EX, Sport Hybrid, EX-L Hybrid, Touring Hybrid | Honda Manufacturing of Indiana (Greensburg, IN) |
| Honda CR-V | LX, EX, Sport Hybrid, EX-L Hybrid, Sport-L Hybrid, Touring Hybrid | Honda of America Mfg. (East Liberty, OH) |
| Honda Pilot | Sport, EX-L, TrailSport, Touring, Elite, Black Edition | Honda Manufacturing of Alabama (Lincoln, AL) |
| Honda Passport | EX-L, TrailSport, Black Edition | Honda Manufacturing of Alabama (Lincoln, AL) |
| Honda Ridgeline | Sport, RTL, RTL-E, Black Edition | Honda Manufacturing of Alabama (Lincoln, AL) |
Through September 30, 2025, eligible buyers can apply the $7,500 federal EV tax credit directly at the dealership and combine it with the proposed auto loan interest deduction for even greater savings.
After that date, the EV credit will only be available when filing your taxes, not at the point of sale.
1. Can you confirm the vehicle’s final assembly location on the window sticker?
This confirms whether the vehicle was assembled in the U.S. and is eligible under the bill.
2. Will my lender issue a year-end interest statement?
You’ll need this documentation when filing your taxes.
3. Is the vehicle new and untitled?
Only brand-new, never-titled vehicles qualify. Demos and used models do not.
4. Do I meet the income limits for the full deduction?
The benefit begins to phase out above $100,000 AGI (single) or $200,000 (joint).
5. Can you provide a VIN eligibility printout for my records?
A printed record of the VIN and final assembly location can simplify filing later.
Keep your loan interest documentation and purchase contract. When filing your 2025–2028 federal tax return, report the deductible amount on the designated IRS line (to be released). You do not need to itemize.
Yes. If your new Honda also qualifies for the federal EV tax credit, you may use both the $7,500 clean vehicle credit (available through September 30, 2025) and the auto loan interest deduction.
Yes. EVs like the Honda Prologue, when assembled in the U.S. and purchased new, may qualify for both the federal EV tax credit and the interest deduction. Always confirm eligibility with your sales advisor.
The deduction applies to interest paid on qualifying loans originated between 2025 and 2028. If you refinance, only interest on the original loan may qualify. Further clarification from the IRS is pending.
