2026 Tax Season: Key Changes, Deadlines, and Deductions
Learn about the latest tax changes, deadlines, and deductions for the 2026 tax season. Stay up to date with everything from tips to car loan rates.
- A new tax credit will allow buyers to claim up to $10,000 a year in interest paid on new American-made cars.
- This credit applies to eligible vehicles purchased between January 1, 2025 and December 31, 2028.
- To qualify, a vehicle must have final assembly in the United States, which can be verified by the vehicle’s VIN.
The Big Beautiful Act, passed last year, made a number of tax changes to car purchases that eligible consumers could benefit from when purchasing certain cars assembled in the United States.
The bill eliminates a federal tax credit of up to $7,500 for eligible electric vehicle purchases, but instead creates a new credit that allows taxpayers to claim up to $10,000 annually on interest paid on loans to purchase new American-made vehicles purchased between January 1, 2025 and December 31, 2028.
Because most people don’t pay $10,000 in interest on their auto loan each year, the typical annual tax savings will vary depending on how much you pay and your income tax rate, but experts told the Detroit Free Press, part of the USA TODAY Network, that new car buyers who qualify for the program could typically save between $300 and $900 a year. Car-buying experts predict the credit will encourage more shoppers to look for cars that qualify for the tax credit.
“Affordability is typically the most important factor for consumers when purchasing a car, but our research shows that with continued tariff news and this latest tax break, Americans are more willing to understand where their cars are made,” Patrick Masterson, lead researcher for shopping site Cars.com’s Made in America Index, told the Detroit Free Press.
New car loan deduction rules
There are rules for qualifying for the deduction, which are outlined at www.IRS.gov. These include that only new cars are covered, used cars are not covered. Also, to qualify for the auto loan deduction, the car must be purchased (not leased, leases are not eligible) and used primarily for personal use.
Single taxpayers with modified adjusted gross income up to $100,000 and married couples with adjusted gross income up to $200,000 are eligible. Modified adjusted gross income is adjusted gross income plus nontaxable income. The IRS explains how to calculate it on its website. The amount a taxpayer can deduct is reduced by $200 for every $1,000 of income above these income limits.
According to the IRS, vehicles eligible for loan forgiveness can be cars, minivans, vans, SUVs, pickup trucks, and motorcycles as long as their gross vehicle weight is less than 14,000 pounds. That means most large trucks won’t qualify, Masterson said.
Most notably, the vehicle must undergo final assembly in the United States. That means where it is physically assembled before being shipped to the dealer.
Some eligible vehicles
“There are three surefire ways for consumers to find a vehicle that meets the criteria for this incentive,” Masterson said. “First, check the Vehicle Identification Number (VIN). If it starts with a 1, 4, or 5, the car was built in the U.S. and meets the minimum requirements for the incentive.”
For those looking for a starting point, check out Cars.com’s 2025 American-Made Index. The 2026 index will be released in June, but there will likely be some changes because some U.S.-made vehicles, such as the Ford Escape, ended production last year. Or President Donald Trump’s 25% tariff on imported cars has brought other vehicle assembly into the United States.
But here are this year’s 10 vehicles, which Masterson said he believes there are dozens more that would qualify.
- Tesla Model Y
- Ford F-150
- lincoln aviator
- chevrolet corvette
- honda passport
- jeep gladiator
- dodge durango
- Volkswagen ID.4
- toyota corolla cross
- acura mdx
Masterson said if a shopper begins visiting a third-party website such as www.cars.com, dealers will include the VIN of the vehicle they list.
Another option to see if your vehicle is eligible is to look at the Monroney sticker on your new car’s window to see where final assembly took place. You can also find the factory where your vehicle was manufactured by entering your vehicle identification number on the National Highway Traffic Safety Administration website (www.nhtsa.gov).
How do I claim the deduction?
If the car is assembled in the U.S., buyers must list the VIN on Schedule 1-A to claim the deduction, and refer to “No Tax on Auto Loan Interest” on page 2 of Schedule 1-A, said Susan Tomper, personal finance columnist for the Detroit Free Press.
Tompole said taxpayers should claim the “total amount of additional deductions” from line 38 of Schedule 1-A on line 13b of the 1040 form. If you take the standard deduction or itemize other deductions on Schedule A, you can claim the auto loan interest deduction.
Mr. Masterson said car buyers should calculate whether it would be financially advantageous to buy a vehicle that was final assembled in the U.S. to take advantage of as many tax credits as possible, or to buy an imported vehicle that may have better incentives. It also depends on what they value in terms of where the car was made.
“You could save up to $10,000, but there’s no definitive answer because a lot of that depends on the consumer, their credit, and how much they’re spending on the car,” Masterson said of the potential interest savings consumers might realize. “It’s really a moving target because not everyone is paying the same amount and not everyone is on the same financial terms.”
Jamie L. Lareau is senior auto writer for USA TODAY and covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at jlareau@freepress.com. Follow her on Twitter @Jalarowan. To sign up for our automotive newsletter. Become a subscriber.
