AFSA Testifies at IRS Public Hearing on Vehicle Finance Interest Tax Deduction
On February 24, AFSA staff testified at an IRS Public Hearing on regulations implementing the new tax deduction for vehicle finance interest. This tax deduction was enacted as part of the “One Big Beautiful Bill” in July 2025. Since that time, AFSA has been in communication with the IRS and Treasury regarding implementation considerations and industry questions.
AFSA provided feedback on the IRS’ proposal to disallow the tax deduction for interest attributable to financed negative equity and voluntary protection products like GAP and credit insurance. AFSA explained that disallowing the deduction for these crucially important components of a vehicle finance transaction will reduce the benefit of the deduction to taxpayers, contrary to the Administration’s policy goals. AFSA also explained that in a vehicle finance contract, the financed balance is an indivisible whole, and creditors are not able report on subtotals of interest paid by consumers. AFSA also shared feedback on eligibility concerns and other aspects of the proposed regulations.
In addition to this appearance, AFSA has been in touch with lawmakers and other administration officials to urge the IRS to reconsider its positions.
March 5th, 2026
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