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American Financial Services Association

OBBB & Moving Metal

OBBB & Moving Metal

The recently signed “One Big Beautiful Bill” (OBBB) is a sprawling piece of legislation that will affect just about every facet of the American economy, including the financial lives of consumers.  While many AFSA members were focused on the bill’s halving of the CFPB’s funding, another OBBB provision may enhance consumer financial flexibility and serve as a boost for the vehicle finance marketplace in moving American-produced metal.

The OBBB allows for auto loan interest to be tax-deductible for new vehicles assembled in the United States and purchased between 2025 and 2028. The deduction is capped at $10,000 and phases out at incomes between $100,000 and $150,000 for single filers and $200,000 and $250,000 for joint filers. In the first half of 2025 16.3 million new light vehicles were sold in the U.S. at an annualized rate. Sixty percent – or almost 10 million – of those vehicles were assembled domestically.  The OBBB deduction provision is similar to a proposal put forward by Sen. Bernie Moreno (R-OH) earlier this year.

Cox Automotive estimates that the average transaction price for a new vehicle was about $49,000 in May 2025. Based on AFSA calculations, a qualifying individual who finances such a vehicle with a 10% down payment and a 72-month loan at 6.5% interest would be eligible for a tax deduction of about $3,000 in the first year of ownership and roughly $1,800 annually on average over the life of the loan. Potentially helpful to consumers, as well: the provision allows for interest on multiple auto loans to be deducted provided the total deduction remains under the $10,000 limit.

While implementation details may be hashed out by the Internal Revenue Service and other federal agencies, the auto loan interest deduction has the potential to aid a significant percentage of consumers as they consider whether to purchase a new vehicle. AFSA continues to closely monitor the regulatory process for OBBB and will provide updates.

July 10th, 2025

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