The Treasury Department is implementing a policy that eliminates taxes on car loan interest, a move meant to lower costs, Treasury Secretary Scott Bessent said on Jan. 7.
The policy, which the secretary called "No Tax on American Car Loan Interest," is being implemented under the Trump administration-backed One Big Beautiful Bill Act, signed into law last summer.
"For new U.S.-assembled vehicles purchased in 2025–2028, eligible taxpayers can deduct up to $10,000 per year in auto loan interest, whether they itemize or take the standard deduction."
"This deduction helps lower monthly costs and makes car ownership more affordable when families need it most," he said.
"The tax cut also supports American workers by applying solely to U.S.-assembled vehicles, strengthening domestic manufacturing."
The guidance said that new vehicles eligible for the tax deduction include those with final assembly in the United States, according to the IRS, and that the car must be for personal use and not for commercial or business purposes.
The IRS has not yet released a list of vehicles and models that may qualify under the program.
The announcement on Wednesday comes as the Trump administration has sought to pivot to a more economy-related message ahead of the November 2026 midterm elections, which could determine which party controls the House and Senate.
Since last November, President Donald Trump and Bessent have sought to highlight the White House's initiatives to reduce prices across a range of goods and services, such as gasoline and eggs.
Trump also announced that he would be banning large institutional investors from purchasing single-family houses, and that such a policy is needed to assist younger families in purchasing their first homes.
Last month, Trump pledged in a prime-time address that he would roll out “some of the most aggressive housing reform plans in American history” in 2026, while administration officials such as Bessent have said that other tax breaks would start to go into effect this year that would provide more tax return funds to families.
In his post, Trump would discuss housing and affordability in more detail at the World Economic Forum in Davos, Switzerland, an event known for attracting CEOs, wealthy financiers, and academics.