Tax deduction for car loans—but only if you buy American

What it does

This bill allows taxpayers to deduct interest paid on car loans, but only for vehicles manufactured in the United States with final assembly occurring domestically. The deduction applies to loans taken out on or after January 1, 2025, and is secured by the vehicle itself. Domestic automakers and their customers benefit; foreign manufacturers and buyers of imported vehicles do not.

Why we flagged it

The bill's operative mechanism is a targeted tax deduction for interest on loans used to purchase US-assembled vehicles. While framed as consumer relief, the primary beneficiary is the domestic automotive sector, which gains a competitive advantage over foreign manufacturers through the tax code.

What the text implies

• The deduction is available only to taxpayers with sufficient tax liability to benefit from it, creating a regressive benefit skewed toward higher-income earners who can afford new vehicles and have tax liability to offset.
• The 'final assembly in the United States' requirement may incentivize automakers to shift assembly operations domestically, but does not require domestic content in components, potentially allowing high-import-content vehicles to qualify.
• The deduction reduces federal tax revenue without corresponding spending reductions or revenue offsets, potentially increasing the deficit or requiring cuts to other programs.
• Buyers of used vehicles, electric vehicles from foreign manufacturers, and vehicles assembled abroad are excluded, creating potential disparities in tax treatment based on vehicle origin rather than environmental or safety criteria.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Taxpayers buying US-manufactured vehicles receive a tax deduction, lowering their effective borrowing cost and incentivizing domestic auto purchases. However, buyers of imported vehicles and those without sufficient tax liability to benefit from the deduction are excluded, creating unequal treatment. The deduction also reduces federal tax revenue, shifting costs to other taxpayers or requiring spending cuts elsewhere.

Who stands to gain

• Domestic automobile manufacturers (Ford, General Motors, Stellantis)
• Consumers purchasing US-assembled vehicles
• Auto financing companies and lenders (indirect benefit from increased loan volume)

Named in the bill

Internal Revenue Code Section 163(h), Automobile Information Disclosure Act, Domestic automobile manufacturers, US Treasury

Where it stands

• Apr 1, 2025 — Introduced · Congress.gov: “Introduced in Senate”
• Apr 1, 2025 — Referred to Senate Committee on Finance · Congress.gov: “Read twice and referred to the Committee on Finance”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

2 lobbying clients named this bill on 2 disclosure filings across 1 quarter, Dec 2025 to Dec 2025. Those filings disclosed $3,210,000 in lobbying spend. A filing names 8 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 41% of bills with at least one filing.

Bernie Moreno, the sponsor, reported $285,000 in PAC receipts in the 2026 cycle.

• General Motors Company — $3,150,000 on 1 filing
• Mazda Motor of America Dba Mazda North American Operations — $60,000 on 1 filing

Lobbying Disclosure Act filings through Jan 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.