The U.S. House of Representatives has passed the sweeping new “One, Big, Beautiful Bill” championed by President Donald Trump, which includes a tax deduction aimed at offering some financial relief on auto loan interest. Under the new legislation, consumers would be able deduct up to $10,000 in interest paid on auto loans, just so long as the vehicle was manufactured in the United States.
Per Automotive News, the bill would also provide tax relief on interest paid on other vehicles as well, such as RVs, trailers, ATVs, and motorcycles.
This tax incentive, part of the broader H.R. 1 package spearheaded by the Trump administration, is designed to offer some consumer relief amid rising interest rates and escalating car prices. It also seeks to bolster domestic manufacturing by rewarding buyers who choose U.S.-built vehicles. The bill narrowly passed the House by a 215-214 vote.
As highlighted by Automotive News, which cites data collected by Edmunds, the average new-vehicle loan last month included $41,444 financed over 69.1 months at an interest rate of 7.1 percent, bringing the total interest paid in the first year to $2,748, and $8,202.52 over a four-year period. Deducting this interest would amount to a $274.85 savings in taxes for those in the 10-percent tax bracket, and $604.66 in savings for those in the 22-percent tax bracket. The first 90 percent of U.S. earners are expected to save between $200 and $300.
The Congressional Budget Office estimates that the deductions could amount to roughly $57.8 billion in lost revenue between now and the 2029 fiscal year.
Supporters argue that the new deduction will lighten the financial burden for buyers and stimulate demand for American-made cars and trucks, potentially providing direct benefits to manufacturers like General Motors, Ford, and Stellantis, all of which operate major assembly plants across the United States. Meanwhile, critics question the long-term fiscal impact of the bill, with U.S. Representative Thomas Massie, R-KY, characterizing it as “a debt bomb ticking.”
