(WXYZ) — Buying a new car isn't cheap, especially with today's interest rates. But for the first time, a new federal tax break could give some buyers real relief.
Watch Peter's report below
It's tax season, and this year, some new car buyers could be getting a break when they sit down to file their returns.
Robin Hartnett just bought a brand new Ford Bronco, and because it was assembled in the United States, she would be eligible to deduct the interest on her auto loan when she files her taxes.
"Every little bit helps...finding out this information that buying a new car I can write off the interest on the new car that's amazing. That's the best news I've heard all day," Hartnett said. "I am really excited that I can write off a little bit of the cost of this."
Under a new Federal law, new car buyers could see tax deductions of up to $10,000 in interest on auto loans that were used to purchase a new American-made vehicle purchased in 2025. The provision is meant to offer some relief as car payments and loan costs have hit record highs.
I spoke with Michael Giusti, a senior analyst for InsuranceQuotes.com, who told me eligible borrowers need to look at the fine print.
"It's going to be a really good deal for a lot of people. But the devil is really in the details," Giusti said.
According to the Internal Revenue Service, the deduction is capped at $10,000, but higher earners get less. Single filers start losing the deduction if they make over $100,000. The deduction is lost entirely if they make over $150,000. For joint filers, the deduction diminishes for couples who earn over $200,000. There are no deductions for couples earning over $250,000.
"It's really exciting for me, you know, a couple hundred bucks, $300, $400, I don't know how much I am paying in interest every month, I am definitely going to be looking that up."
Unfortunately, Robin's is going to be in for some disappointment because her Ford Bronco Sport was made in Mexico, so it doesn't qualify.
Here's what you need to know to qualify:
- The vehicle must be new, not leased or used
- It must have been purchased after December 31, 2024.
- It must be for personal use only
- It must have undergone final assembly in the United States
"It really comes down to where the manufacturing plant was located," Giusti said.
