How to Deduct $10K on Taxes on Cars Built in the USA in 2025

At Huston Cadillac, we’re proud to serve drivers throughout Dundee, Wahneeta, Eagle Lake, and beyond. Whether you’re shopping for a new Cadillac, scheduling routine maintenance, or looking for genuine parts, our team is here to make every step simple and stress-free. From the latest models like the Cadillac Lyriq to expert service you can trust, we’re committed to helping you find exactly what you need. Visit us or contact us today—we’re ready to assist with all your automotive needs.

A major federal tax change is here for 2025, giving drivers the chance to deduct up to $10,000 in auto loan interest on U.S.-built vehicles. In this article, we’ll explain who qualifies, which cars meet the requirements, and how to claim this deduction under the new law. If you’ve been wondering how to save thousands on your next purchase—and why a U.S.-assembled vehicle like the Cadillac Lyriq makes sense—this guide has the answers.

How Can You Deduct $10K on Taxes for U.S.-Built Cars in 2025?

A new law now lets many drivers deduct up to $10,000 in auto loan interest when buying a car built in the United States. This change applies to vehicles for personal use, not just for business. If you’re thinking about financing a U.S.-assembled model like the Cadillac Lyriq, this is worth knowing.

This tax break comes from the One Big Beautiful Bill Act (OBBBA) and runs from 2025 through 2028. It’s one of the most significant new tax benefits for buying American cars in years. Here’s what you should know about this US-made car tax deduction 2025:

• You must buy the vehicle with a loan — leases do not qualify.
• The vehicle must be assembled in the U.S. (VIN starts with 1, 4, or 5).
• You can deduct up to $10,000 in interest over the life of the loan.
• Income limits apply — $100,000 for single filers and $200,000 for joint filers. – Qualifications based on income vary. Consult a tax professional to see if you qualify.
• The deduction applies to all types of cars — gas, hybrid, and electric, including US-built EV tax incentives for models like the Lyriq.

This new rule also marks a shift in IRS vehicle deduction rules. In the past, personal car loan interest wasn’t deductible. Now, many buyers can finally reduce their taxable income simply by choosing an American-assembled vehicle and financing it. The main steps are simple:

• Pick a U.S.-built car.
• Finance it with a standard loan.
• Keep clear records of your payments.

By following these steps, you may qualify to deduct $10K taxes USA-built cars, giving you real savings at tax time.

What Are the IRS Vehicle Deduction Rules for 2025?

The new law sets clear rules for drivers who want to claim this deduction. If you plan to finance a U.S.-assembled car such as the Cadillac Lyriq, it’s important to understand how these guidelines work. These rules help ensure that only eligible buyers receive the tax benefits for buying American cars.

Under the IRS vehicle deduction rules, you may qualify for the US-made car tax deduction 2025 if you meet the following requirements:

• Purchase window: The car must be bought between January 1, 2025, and December 31, 2028.
• Loan only: You must finance the vehicle with a standard loan, not a lease.
• Assembly location: The vehicle must be built in the U.S. Look for VINs starting with 1, 4, or 5.
• Income cap: Your income must be less than $100,000 (single) or $200,000 (joint filers).
• Vehicle type: Both gas-powered cars and US-built EV tax incentives apply, which includes models like the Lyriq.

These steps help taxpayers know when they can deduct $10K taxes USA-built cars and when they cannot. Here’s a simple way to check if your car qualifies:

Rule	What to Look For
Assembly Location	Verify VIN starts with 1, 4, or 5
Purchase Method	Standard loan, not a lease
Purchase Date	2025–2028
Income Limit	Under $100K single / $200K joint

If you meet these rules, you can deduct $10K taxes USA-built cars over the life of your loan. Selecting a U.S.-assembled vehicle ensures you benefit from this program while supporting domestic manufacturing.

How Do You Claim the US-Made Car Tax Deduction on Your Return?

Claiming the new deduction is straightforward if you prepare in advance. Whether you’re financing a U.S.-assembled model like the Cadillac Lyriq or another American-built vehicle, good recordkeeping is key. This program provides real tax benefits for buying American cars and follows specific IRS vehicle deduction rules.

Follow these steps to make sure you qualify for the US-made car tax deduction 2025:

1. Keep detailed loan records — track how much interest you pay each year.
2. Verify U.S. assembly — check the VIN (look for 1, 4, or 5) or ask the dealer to confirm.
3. Confirm your income status — single filers must earn less than $100,000, joint filers less than $200,000.
4. Save purchase documents — proof of purchase date is needed to ensure you fall within the 2025–2028 window.
5. Consult a tax professional — they can help you apply the deduction correctly when filing.

Here’s what to have ready when filing your return:

Required Information	Why It Matters
Loan statements	Shows how much interest was paid
VIN details	Confirms U.S. assembly for eligibility
Purchase date	Ensures the car was bought within the program period

By following these simple steps, many drivers can deduct $10K taxes USA-built cars and maximize their savings. Selecting a U.S.-assembled vehicle that qualifies, such as the Lyriq, allows you to take advantage of US-built EV tax incentives while reducing your taxable income.

Why Is Now the Best Time to Buy a U.S.-Built Vehicle?

There has never been a better moment to choose an American-assembled car. With the US-made car tax deduction 2025, many buyers can save thousands. The law lets qualifying drivers deduct $10K taxes USA-built cars, offering a major financial advantage.

This program is also aligned with other tax benefits for buying American cars, including US-built EV tax incentives. If you have been thinking about upgrading to a luxury electric vehicle like the Cadillac Lyriq, acting soon ensures you capture these savings while they are still available.

Here’s why waiting could cost you more:

• The deduction is available only from 2025 through 2028.
• IRS vehicle deduction rules may change after this period.
• U.S.-assembled cars that meet the criteria may sell quickly as demand rises.

A quick summary of the benefits:

Reason to Buy Now	What It Means for You
$10K deduction	Reduce your tax bill over the life of the loan
Support U.S. jobs	Choose a vehicle built in America
EV incentives	Get added savings on models like the Lyriq

By combining a smart purchase with clear tax advantages, you can enjoy advanced technology, lower long-term costs, and a luxury driving experience today.

How can I deduct $10K in taxes for cars built in the USA?

You can deduct up to $10,000 in auto loan interest on qualifying U.S.-assembled vehicles purchased between 2025 and 2028 by filing under the updated IRS vehicle deduction rules.

Which vehicles qualify as USA-built for this deduction?

Vehicles assembled in the United States, including many American brands and some foreign brands built in U.S. factories, qualify. The VIN should start with 1, 4, or 5 to confirm U.S. assembly.

Does this deduction apply to leased cars?

No, the deduction applies only to vehicles that are financed or purchased outright, not leased.

What documentation is needed for the IRS?

You need proof of loan interest paid, the vehicle’s VIN to confirm U.S. assembly, the purchase date, and income records to verify eligibility limits.

Is this deduction available for both EVs and gas-powered cars?

Yes, both types qualify if they are assembled in the United States. U.S.-built EVs may also receive additional incentives.

Explore Your Savings at Huston Cadillac

Looking for your next Cadillac? Huston Cadillac is proud to serve drivers in Dundee, Wahneeta, and Eagle Lake. We offer a full range of new models, including the Cadillac Lyriq, plus expert service and support every step of the way. Whether you need help choosing the right vehicle or understanding available tax benefits, our team is here to assist. Call us today or stop by to explore your options in person.

If you are still comparing models, we can help there too. We’ve covered key differences in Cadillac Escalade trims, from V-Series vs Sport Platinum vs Sport to Escalade vs Escalade ESV vs Escalade IQ. You can also learn more about how Escalade Sport and Sport Platinum compare side by side, browse our full selection of vehicles, hours, and find the model that fits your needs. For more details about available tax savings on U.S.-assembled vehicles, read our guide on how to qualify for federal vehicle deductions.

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Disclaimer: All information is provided for general informational and entertainment purposes only. While we strive for accuracy, we cannot guarantee that all content is complete, current, or error-free. Any reliance you place on such information is strictly at your own risk. This article may include opinions and is not endorsed by, or officially affiliated with, any vehicle manufacturer or brand. Always consult official sources – such as the vehicle’s owner’s manual, authorized dealerships, or certified professionals – for the most up-to-date and personalized information. Consult a tax professional for all deduction rules & regulations in your area.

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Disclaimer: All information is provided for general informational and entertainment purposes only. While we strive for accuracy, we cannot guarantee that all content is complete, current, or error-free. Any reliance you place on such information is strictly at your own risk. This article may include opinions and is not endorsed by, or officially affiliated with, any vehicle manufacturer or brand. Always consult official sources – such as the vehicle’s owner’s manual, authorized dealerships, or certified professionals – for the most up-to-date and personalized information.

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