New tax changes include auto loan interest deduction – WWNY
(InvestigateTV) — Taxpayers preparing their 2025 returns will encounter several new changes, including a federal law allowing some borrowers to deduct interest paid on auto loans.
The new deduction applies to borrowers who purchased cars in 2025 and meet specific criteria, according to Cherry Dale, vice president of financial education at Virginia Credit Union.
Borrowers must provide the Vehicle Identification Number when filing, and the deduction is available even for those who don’t itemize, Dale said.
“Some of the criteria is income. If you are a single filer, less than 100 [thousand], if you are jointly filing less than $200,000, your car also needs to be assembled in America,” she shared. “Keep in mind it’s the interest, not the entire payment of that car.”
The auto loan interest deduction is capped at $10,000, though Dale noted most borrowers likely don’t pay that much in annual car loan interest.
“Every little bit helps if you qualify for this deduction,” Dale said.
Dale also highlighted changes to student loan interest deductions for 2025.
“Student loan interest got un-paused in 2025,” she shared. “So, if you did have some interest on your student loans for that year, look into to see if you meet the criteria for that being a tax deduction.”
Taxpayers can visit studentaid.gov to learn more about student loan interest deductions and determine eligibility.
Many community organizations and credit unions offer free or low-cost tax preparation help for qualifying taxpayers.
Filing early can also protect against identity theft, tax experts advise.
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