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This tax season, there’s a new deduction for interest on car loans

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Vehicles fill the parking lot at a Honda dealership in San Marcos, Texas. About 60% of the Honda vehicles sold in the U.S. last year were assembled in the United States, according to Honda, which means they could be eligible for a new tax provision allowing buyers to deduct the interest paid on their auto loans.

Taxpayers who purchased a new vehicle in 2025 may qualify for a new deduction on their taxes — even if they’re not itemizing. But not everyone is eligible.

(Image credit: Brandon Bell)