New Car in 2025? Maximize Your Tax Deduction

Did you purchase a car in 2025? You could be eligible for a valuable tax break, thanks to the “One Big Beautiful Bill Act” (OBBB). If you financed your vehicle through TEG Federal Credit Union—either directly or at one of our participating indirect dealers—here’s how you can claim up to $10,000 in car loan interest deductions on your 2025 taxes. The 2025 car loan interest deduction can make a significant impact on your tax return if you qualify.

We want to inform you so you can maximize your savings and enjoy the benefits of this exciting new law. Understanding how to take advantage of the 2025 car loan interest deduction can help you optimize your purchase.

Please consult your tax advisor with any questions regarding your specific tax eligibility.

What Is the Car Loan Interest Deduction?

Starting in 2025, the OBBB lets eligible car buyers deduct up to $10,000 of interest paid on a new auto loan. This deduction is “above-the-line,” meaning you can claim it even if you take the standard deduction—no need to itemize!

Whether you financed your car through TEG, directly, or with one of our trusted dealers, your interest payments count toward this benefit. Every dollar you deduct lowers your Adjusted Gross Income (AGI), possibly leading to even more tax savings. In fact, the 2025 car loan interest deduction may help reduce your taxable income dramatically.

Are You Eligible? Quick Checklist for 2025 Buyers

If you bought your car in 2025, check these boxes:

• Brand New Vehicle: Only first-time owners of new vehicles are eligible. Used and leased vehicles aren’t included.
• Assembled in the USA: The car’s final assembly must have taken place in the United States. Check your vehicle’s VIN or the window sticker, or use the NHTSA VIN decoder.
• Personal Use: The car must be for personal—not business—use.
• Qualified Vehicle Type: Cars, vans, minivans, SUVs, pickup trucks, and motorcycles (GVWR under 14,000 lbs) all qualify.
• Loan Origination in 2025: Your loan began after December 31, 2024, and within the 2025 calendar year.

Don’t Forget the Income Limits

The deduction is designed for middle-income earners:

• Single Filers: Full deduction if your Modified AGI is $100,000 or less; phased out and unavailable above $150,000.
• Married Filing Jointly: Full deduction if your Modified AGI is $200,000 or less; phased out and unavailable above $250,000.

For every $1,000 you earn above the starting limit, your deduction is reduced by $200.

Step-by-Step: How 2025 Buyers Claim Their Deduction

1. Check Your Interest Paid: You can find this on your regular monthly statement. Check your December statement. Look for the “Year-to-Date” (YTD) interest totals section. This figure is what you need for your taxes.
2. Have Your VIN Handy: You’ll need to include your car’s Vehicle Identification Number (VIN) on your tax return to verify eligibility.
3. Use the Correct Tax Form: For your 2025 taxes, complete Schedule 1-A and attach it to your Form 1040.
4. Save Your Records: Keep you loan documents, interest statement, and purchase paperwork in your records.

Why Choose TEG for Your Auto Loan?

With TEG, you get competitive rates, friendly local service, and qualified financing experts who help you make the most of your finances. TEG is more than just a financial institution; we are a group that focuses on our members’ best interests and understands what matters. When you succeed, we succeed, so we want you to take full advantage of the 2025 car loan interest deduction if you are eligible.

Have Question? We’re Here to Help!

Tax rules can be tricky—that’s why we recommend talking with a tax professional about your specific situation. For questions about your TEG loan, your interest totals, or how to get started on future financing, reach out to TEG Federal Credit Union today.

Purchased a car in 2025? Get your TEG statement, gather your info, and claim your 2025 car loan interest deduction for maximum savings!

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