2025 Auto Loan Interest Deduction: How to Qualify And Save with RadiFi
How the 2025 Auto Loan Interest Deduction Works
If you’re buying a new vehicle this year, don’t miss the opportunity to take advantage of the 2025 auto loan interest deduction. This brand-new federal tax break allows eligible buyers to deduct interest on qualifying auto loans—making car ownership more affordable than ever.
RadiFi Credit Union is here to help you take full advantage—with competitive auto loan rates as low as 4.85% APR* and local service you can trust.
What Is the 2025 Auto Loan Interest Deduction?
Thanks to the newly enacted One Big Beautiful Bill Act, qualified consumers who buy a new, U.S.-assembled vehicle between January 1, 2025, and December 31, 2028 can deduct up to $10,000 per year in auto loan interest from their federal taxes.
It’s a historic shift in tax policy: for the first time in nearly 40 years, personal auto loan interest is tax-deductible again—for those who qualify. This incentive is aimed at making new car ownership more affordable.
Important: You must purchase a new vehicle and originate your loan on or after January 1, 2025 to qualify.
Who Qualifies for the Deduction?
To be eligible to deduct car loan interest on your federal tax return, you must meet the following criteria:
- Purchase a new vehicle for personal use between January 1, 2025 and December 31, 2028
- The vehicle must be assembled in the United States
- Finance the purchase with a new auto loan—not a lease or cash purchase
- Use the vehicle for personal, not business use
- Itemize deductions on your federal tax return
- Meet IRS income thresholds for eligibility
Always consult your tax advisor to confirm your specific eligibility and ensure your documentation aligns with IRS requirements.
How Much Can You Deduct?
The exact savings depends on your loan size, interest rate, and tax situation—but eligible buyers may deduct up to $10,000 in interest per year. Consult with your tax advisor for complete information.
What Doesn’t Qualify?
To avoid confusion, here’s what does not qualify for the 2025 deduction:
- Existing auto loans taken out before January 1, 2025
- Vehicles purchased prior to 2025—even if still being paid off
- Leased vehicles
- Vehicles not assembled in the U.S.
- Vehicles used primarily for business or commercial purposes
Why Finance with RadiFi?
To make the most of this new tax benefit, it’s critical to work with a lender who offers straightforward, qualifying auto loans. At RadiFi Credit Union, we’re proud to offer:
- Rates as low as 4.85% APR*
- Flexible loan terms up to 84 months
- New loan originations that meet federal tax guidelines
- Fast, local decision-making
- 90 days no payments** available for qualified borrowers
- No prepayment penalties
- Friendly, local service focused on your financial wellbeing
2025 Car Buyer’s Tax Checklist
Before you head to the dealership, make sure you:
- Choose a new, U.S.-assembled vehicle
- Purchase and finance the vehicle on or after Jan. 1, 2025
- Use a traditional auto loan, not a lease
- Finance through RadiFi Credit Union
- Track your interest payments for tax season
- Consult your tax advisor for full eligibility and filing guidance
Final Thought: Don’t Miss Out on This Tax Break
This federal tax deduction is a big deal—and a big opportunity to save. But it’s only available for a limited time and only for new vehicle purchases starting in 2025. With RadiFi by your side, you can drive off knowing you’re getting a great rate and potentially great tax savings too.
Apply now or visit your nearest RadiFi branch today.
All Your Burning Questions Answered
The One Big Beautiful Bill Act is a federal tax reform package signed into law in 2025. It includes a range of consumer-focused tax benefits—one of the most notable being the deduction of interest on new auto loans. Under the Act, qualified buyers can deduct up to $10,000 per year in interest on new auto loans for U.S.-assembled vehicles purchased and financed between 2025 and 2028. The bill is designed to support American manufacturing and make vehicle ownership more affordable for everyday consumers.
Only the interest portion of your auto loan payments is potentially deductible. The vehicle’s purchase price and principal payments do not qualify.
Yes! RadiFi offers new auto loans that meet federal requirements for the 2025 interest deduction. With competitive low rates and local service, RadiFi makes it easy to finance the right way—and potentially save more at tax time.
You may be able to deduct up to $10,000 per year in interest paid on your qualifying auto loan. The actual amount will depend on your loan balance, rate, and how much interest you pay during the tax year. Please consult your tax advisor for complete details and information.
Yes. The deduction phases out for higher-income earners. The IRS sets income limits based on your filing status. If you’re unsure whether you qualify, speak with a tax advisor.
It depends. Some dealer financing structures, like leases or promotional offers, may not meet federal guidelines. To be safe, finance through a trusted lender like RadiFi Credit Union, which offers qualifying traditional auto loans.
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