New Car Loan Interest Break Applies Only to Vehicles Assembled in the USA

The tax and spending law signed on July 4, 2025 includes a new tax break for car buyers: up to $10,000 a year in interest on loans for new vehicles, but only if the vehicle’s final assembly took place in the USA. USA Today laid out how it works on July 5, 2025.

How the break works

As USA Today reported, the break covers interest on loans for new vehicles under 14,000 pounds that are assembled in the USA, for purchases made in 2025 through 2028. It phases out for individuals with incomes between $100,000 and $150,000, and between $200,000 and $250,000 for joint filers. It does not apply to fleet purchases, commercial vehicles or leases, and used vehicles do not qualify.

USA Today described it as a credit, but in the law it works as a deduction of loan interest from taxable income, so the actual savings depend on the buyer’s tax bracket and how much interest they pay.

Why it matters for Made in USA

This is one of the clearest examples of origin written directly into the tax code. The test is final assembly, not the brand’s headquarters. A foreign-brand car built in Alabama or South Carolina can qualify, while a domestic-brand model assembled in Mexico or Canada cannot.

That makes the vehicle’s window sticker more important than ever. Every new car sold in the USA carries a label showing its final assembly point and the share of USA and Canadian parts under the American Automobile Labeling Act. Shoppers who want both the tax break and a high domestic content can check both lines before they sign.

Keep in mind that “assembled in the USA” is not the same as an unqualified “Made in USA” claim. Most vehicles use parts from many countries. The break rewards USA assembly jobs, and the parts-content line tells you how far the domestic supply chain goes.

FAQ

Which vehicles qualify for the car loan interest break?

New personal-use vehicles under 14,000 pounds with final assembly in the USA, bought with a loan in 2025 through 2028.

Is the break a credit or a deduction?

The law treats it as a deduction of up to $10,000 a year in loan interest. USA Today’s graphic called it a credit.

How can I tell where a car was assembled?

Check the window sticker. It lists the final assembly point and the percentage of USA and Canadian parts. The VIN also identifies the assembly plant.