Trump’s Big Beautiful Bill Axes EV Tax Credits, Adds American-Made Car, Truck And Motorcycle Loan Interest Deduction
President Trump’s big beautiful bill is making two major changes to new car purchase tax incentives.
First, it terminates the clean vehicle tax credits for zero-emissions vehicle purchases after September 30, 2025 instead of of the originally planned December 31, 2032 date. This applies to both the $7,500 credit for new clean vehicle purchases and leases along with the $4,000 credit for used clean vehicles.
In its place is a auto loan interest deduction that applies to essentially all new on-road vehicles with at least two wheels that are assembled in the USA and have a gross vehicle weight rating (GVWR) of less than 14,000 pounds.
The deduction has a $10,000 annual cap and phases out for single taxpayers earning more than $100,000 in modified adjusted gross income and joint filers earning more than $200,000 at a rate of $200 per $1,000 in additional income. The incentive does not apply to leases.
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The deduction is retroactive to Jan. 1, 2025, but expires after the 2028 tax year. Tax filers do not need to itemize their returns to take advantage of it.
Cox Automotive chief economist Jonathan Smoke told The New York Times that the average car owner pays $3,000 in annual interest, which would result in approximately 5400 in tax savings. Getting the full $10,000 deduction would require a loan in excess of $110,000. There are currently more than 140 car and truck models assembled in the U.S. by automakers from around the world plus several dozen motorcycles.
American Cars And Racing recently announced the winners for our 2025 US-Built Car Of The Year AwardsTM, which celebrate our favorite new Made in USA models. All cars and trucks that were either all-new or significantly updated for 2025 were eligible for consideration, regardless of where the company that makes them is based.
Check out the winners: