The USA CAR Act would allow individual taxpayers to deduct interest paid on car loans from their federal income taxes, making it an "above-the-line" deduction that reduces taxable income without requiring itemization. The deduction applies only to loans taken out after January 1, 2025, for automobiles that are manufactured and fully assembled in the United States. This benefit would help consumers reduce their tax burden when financing domestic vehicles, effectively lowering the cost of car ownership. The bill, introduced in May 2025, has been referred to the Senate Committee on Finance for consideration and would take effect immediately upon passage. While no specific dollar limits or funding amounts are specified in the legislation, the deduction would apply to any qualifying auto loan interest paid by individual taxpayers.
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