Auto Loan Interest Deduction Explained

Smart Moves for Smarter Savings: What You Need to Know About Auto Loan Interest Deductions

If you’re an individual making under $100,000 annually, you may qualify for a new Auto Loan Interest Deduction of up to $10,000 on your next vehicle purchase. This deduction—aimed at making vehicle ownership more accessible for working Americans—allows qualifying taxpayers to write off a portion of the interest paid on a new car loan.

That’s real savings for everyday drivers looking to upgrade their ride. Whether you’re commuting to work, taking the kids to school, or heading out for a weekend adventure, this incentive can help ease the financial burden of buying a new car.

To qualify:

• You must earn less than $100,000 annually (or $200,000 for joint filers)

• The vehicle must be new and purchased for personal use

• Interest paid on the loan can be claimed during tax filing
• The vehicle must be assembled in the United States

This is a huge win for consumers who’ve felt priced out of the new vehicle market—and an opportunity to make ownership more manageable in 2025.

Example: How the $10,000 Auto Loan Interest Deduction Can Work

New Vehicle: 2025 GMC Sierra 1500 Elevation w/ TurboMax
Vehicle Price: $48,000
Loan Term: 60 months (5 years)
Interest Rate: 4.9% APR
Monthly Payment (approx.): $905.93
Total Interest Paid Over Life of Loan: ~$6,355.83
Interest Paid in First Year: ~$1,437.56
Eligible Tax Deduction (Year 1): $1,437.56 (assuming all criteria are met)
Estimated Tax Savings (22% bracket): $1,437.56 × 22% ≈ $316.26 back in your pocket

Compare That to a Used Truck That Doesn’t Qualify:
Used Vehicle Price: $43,000
Interest Rate: 10% APR
Loan Term: 60 months
Monthly Payment (approx.): $912.40
Total Interest Paid Over Life of Loan: ~$11,743.83
Interest Paid in First Year: ~$3,827.75
Eligible Tax Deduction: $0 (used vehicles don’t qualify)
Tax Savings: $0

Despite the higher price, the new GMC Sierra buyer pays less per month, builds more equity, and enjoys a tax break, while the used truck buyer pays more interest and misses out on deductions.

Qualified Interest: To qualify for the deduction, interest must be paid on the loan that is originated after December 31st, 2024.

Small Business Owners, Take Note: There’s Never Been a Better Time to Invest in Your Fleet

If you’re a business owner in North Carolina, you might be surprised to learn that purchasing a vehicle this year could lead to major tax savings. Thanks to Section 179 of the IRS tax code and the Big Beautiful Bill, you can deduct up to 100% from your business vehicle purchase—all while upgrading to the latest in automotive innovation.

At Everett Chevrolet of Hickory Cadillac, we proudly carry vehicles that qualify for these programs, including all-new commercial vehicles and heavy SUV’s and Trucks! Whether you’re in construction, real estate, delivery, or another entrepreneurial field, these vehicles could be your smartest financial move this year.

What Is Section 179?

Section 179 allows businesses to deduct the full purchase price of qualifying equipment and vehicles in the same tax year they’re placed in service. Rather than spreading depreciation over several years, you get your tax break now.

• Deduct up to $31,300 on qualifying vehicles between 6,000 lbs and 14,000 LBS

• Deduct up to 100% in the first year on qualifying vehicles over 14,000lbs up to $1,250,000 (Does not qualify for Interest Write Off)

• Must be used at least 50% for business purposes

Bonus: Federal EV Tax Credit Ends Soon

If you purchase a new electric vehicle assembled in the U.S. (Under $80k MSRP) before September 30, 2025, you may qualify for up to $7,500 in federal tax credits.

Buy now, and you could combine the Section 179 deduction and EV tax credit to dramatically reduce your business tax bill.

Who Can Take Advantage?

Section 179 isn’t just for large companies. If you’re a:

• Small business owner

• Independent contractor

• Self-employed entrepreneur

…you may qualify, too! Our team can walk you through how your purchase may benefit your business.

Time Is Running Out

With EV credits phasing out, and bonus depreciation scheduled to shrink year over year (40% in 2025 and 20% in 2026), the time to act is now.

Vehicles must be placed in service by December 31, 2025 to qualify for this year’s deductions. That means getting it on the road—not just signing a contract.

Let Everett Help You Save

We’ve been helping businesses in our community find smart automotive solutions since 1967. Our experienced sales professionals can help you:

• Understand which vehicles qualify

• Ensure timely delivery and registration

Start Saving Today

Visit Everett Chevrolet of Hickory Cadillac to explore our selection of qualifying EVs and commercial-friendly vehicles. Our team is here to help you maximize your savings while upgrading your business.

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Disclaimer: Everett is not a tax advisor. Always consult with your CPA or tax professional to determine your specific eligibility.