Episode 47 of the Construction Accounting Podcast with George Ghazarian, CPA · 4 min 1 sec · Published 7 December 2025

There is a tax break in the One Big Beautiful Bill Act that most contractors have not heard about, and it is an unusual one: it applies to your personal vehicle, not your work truck. It lets you deduct up to $10,000 a year in auto loan interest, and unlike almost every other deduction of its kind, you can take it whether or not you itemize.

What you’ll learn

  • What the new auto loan interest deduction covers
  • The five qualification rules, including the one that catches contractors out
  • The income limits and where the phaseout begins
  • A worked example of what it saves at different tax brackets
  • Who should not plan around this

What the deduction is

Starting in 2025, a federal rule inside the One Big Beautiful Bill Act lets you deduct up to $10,000 per year in interest on a new auto loan.

The unusual part: you can take this deduction whether you itemize or take the standard deduction. Most deductions of this type do not work that way.

Who it benefits most

If you are financing a $40,000, $50,000 or $70,000 personal vehicle, you might be paying several thousand dollars of interest a year, particularly at current rates. This lets you deduct up to $10,000 of that interest annually — real money, somewhere between $1,500 and $3,000 a year depending on your bracket.

If you were already planning to buy a personal vehicle, this is effectively a bonus from the IRS on a purchase you were making anyway.

The five qualification rules

  1. The vehicle must be brand new. Not used. Not certified pre-owned.
  2. It must be financed on or after 1 January 2025. No retroactive claims — a truck bought last summer does not count.
  3. It must be assembled in the United States. This rules out some popular imports. Check the assembly location with the dealer or via the VIN.
  4. It must be under 14,000 pounds. No heavy commercial rigs, but most pickups — F-150s, Silverados, Rangers, Tacomas — and SUVs qualify.
  5. It must be used personally, not as a business asset. This is the one that trips up contractors.

That last rule matters. If you list the vehicle as a business truck, depreciate it, take Section 179 on it or write off mileage, you cannot also take this deduction. It is purely for a personal vehicle — which is a little ironic given contractors spend all day around trucks.

Income limits

  • Single filers — phaseout begins at $100,000 MAGI, gone entirely at $150,000.
  • Married filing jointly — phaseout begins at $200,000, gone at $250,000.

Below those thresholds you can take the full deduction. Inside the phaseout band you get less. Above it, nothing.

What it is actually worth

Say you buy a $55,000 SUV. Interest in year one of the loan might be around $6,000. You deduct all $6,000, since it is under the $10,000 cap.

  • In the 22% bracket: $6,000 × 0.22 = $1,320 saved
  • In the 24% bracket: $6,000 × 0.24 = $1,440 saved

And you do not have to itemize to claim it, which is what makes this one unusual.

The catch: it expires after 2028

The deduction is available for the 2025, 2026, 2027 and 2028 tax years. Unless Congress extends it, it disappears after that. If you were already considering a personal vehicle with a significant loan, the window matters.

Who should not build plans around this

  • Contractors who want to write off a truck for business. Section 179, bonus depreciation or mileage deductions on a genuine work vehicle are usually worth considerably more than this.
  • High earners above the income limits.
  • Anyone buying used. Used does not count, full stop.
  • Anyone whose vehicle is not US-assembled. Check the VIN rather than assuming.

The short version

  • Deduct up to $10,000 a year of interest on a new auto loan
  • Works even if you take the standard deduction
  • Vehicle must be new, US-assembled, under 14,000 lbs, financed from 2025
  • Personal use only — it cannot be a business vehicle you depreciate
  • Phases out from $100k single / $200k joint, and ends after 2028

Want this applied to your numbers?

We are a CPA firm built for construction contractors. If you want to know what this looks like against your actual profit, salary and job mix, we will run it with you.

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This episode is general information about how these rules work, not advice for your situation. Tax law changes and the right answer depends on your entity, your income and your circumstances. Talk to a CPA before acting on it.