New Tax Break: Deduct Your Car Loan Interest

Good news for Service Plus members who've financed a new vehicle!

A new federal law passed in July creates a temporary tax deduction that could save you money on your taxes. Here's what you need to know:

What's the Tax Break?

From 2025 through 2028, you can deduct the interest you pay on qualifying car loans from your federal taxes. This is an "above-the-line" deduction, which means you can claim it even if you take the standard deduction instead of itemizing.

Does Your Loan Qualify?

Your car loan interest is deductible if your vehicle meets these requirements:

• New vehicle only (not used or pre-owned)
• Personal use (not for business)
• Final assembly in the USA
• Secured by the vehicle with a first lien
• Must be a car, minivan, van, SUV, pickup truck, or motorcycle
• Under 14,000 pounds gross vehicle weight

The loan must have been made after December 31, 2024, so if you financed a qualifying vehicle with Service Plus this year, you may be eligible. There are income limits and other restrictions that may apply, so be sure to discuss this with your tax professional.

Is This A Good Time To Buy A New Vehicle?

If you're already planning to purchase a new vehicle, this deduction might be worth discussing with your tax advisor as you evaluate your timing and financing options. However, a tax deduction alone shouldn't be the primary reason to take on a new car loan.

Questions?

Contact or visit Service Plus if you have more questions. We're here to help you understand how this new benefit might apply to your situation.

This information is for general guidance only and should not be considered tax advice. Please consult with a qualified tax professional for advice specific to your situation.