IRS Pub 6126 – Purchased A New Vehicle? – If you’ve recently purchased a new vehicle or are planning to buy one soon, you might be eligible for a valuable tax break. IRS Publication 6126, titled “Purchased A New Vehicle?”, outlines a new deduction for interest paid on vehicle loans under the One, Big, Beautiful Bill (OBBBA). This provision aims to provide financial relief to American taxpayers by allowing deductions of up to $10,000 annually on qualifying car loan interest for purchases made between 2025 and 2028. As of February 2026, this deduction is available to both those who itemize and those who take the standard deduction, making it accessible to a wide range of filers.
In this comprehensive guide, we’ll break down what IRS Pub 6126 covers, eligibility requirements, how to claim the deduction, and more. Whether you’re searching for “car loan interest deduction 2026” or “new vehicle tax credit IRS,” this article has you covered with the latest details from trusted sources.
What Is IRS Publication 6126?
IRS Publication 6126 is a taxpayer guide released in January 2026 that explains the new “No Tax on Car Loan Interest” provision enacted under the OBBBA. It focuses on deducting interest paid on loans for new personal vehicles purchased after December 31, 2024. The goal is to support American manufacturing and ease the financial burden of vehicle ownership.
Key highlights from the publication include:
- Eligible Vehicles: Cars, minivans, vans, SUVs, pickup trucks, or motorcycles with a gross vehicle weight rating (GVWR) of less than 14,000 pounds.
- Assembly Requirement: The vehicle must undergo final assembly in the United States.
- Deduction Limit: Up to $10,000 per year, per tax return, regardless of filing status.
- Duration: Applies to loans incurred for purchases from 2025 through 2028.
This deduction is not available for used vehicles, leases, commercial purchases, or vehicles assembled outside the U.S. For the most accurate and up-to-date information, download IRS Pub 6126 directly from the official IRS website: https://www.irs.gov/pub/irs-pdf/p6126.pdf.
Who Is Eligible for the Car Loan Interest Deduction?
To qualify under IRS Pub 6126, several criteria must be met:
- Purchase Date: The vehicle must be bought after December 31, 2024.
- New Vehicle: It must be considered “new” for federal income tax purposes, meaning you’re the first owner.
- Personal Use: The vehicle should be used primarily (more than 50% of the time) for personal purposes by you, your spouse, or qualifying relatives.
- Loan Requirements: The interest must be on a secured loan specifically for the vehicle purchase, including amounts for warranties, service plans, or other directly related costs.
- Income Limits: The deduction phases out for modified adjusted gross income (MAGI) over $100,000 for single filers or $200,000 for joint filers.
Exclusions apply to commercial vehicles, refinancings not tied to the original purchase, or loans exceeding the vehicle’s cost. Always verify your vehicle’s U.S. assembly using the VIN decoder on the National Highway Traffic Safety Administration (NHTSA) website or the vehicle’s label.
How to Claim the Deduction on Your Tax Return?
Claiming the deduction is straightforward but requires attention to detail:
- Gather Documentation: Keep records of your loan interest payments (your lender may provide Form 1098-A or similar reporting starting in 2025).
- Include the VIN: You must report the Vehicle Identification Number (VIN) on your tax return for each year you claim the deduction.
- File Your Return: Add the qualifying interest (up to $10,000) as an adjustment to income on Form 1040.
- Deadlines: For 2025 purchases, claim on your 2025 tax return due April 15, 2026 (or extended deadline).
If you’re unsure, consult a tax professional. Note that lenders are required to report interest of $600 or more to the IRS.
Benefits of the New Vehicle Tax Deduction
This deduction can lead to significant savings. For example, if you pay $12,000 in interest on a $50,000 loan, you could deduct $10,000, potentially reducing your taxable income and saving hundreds or thousands depending on your tax bracket. It’s especially beneficial for buyers of U.S.-made vehicles, promoting domestic manufacturing while helping with rising auto costs.
Industry groups like the National Automobile Dealers Association (NADA) have praised the inclusion of financed add-ons like warranties in the deductible amount.
Frequently Asked Questions About IRS Pub 6126
1. Is the deduction available for electric vehicles?
Yes, as long as they meet the general eligibility criteria, including U.S. assembly. Note: This is separate from clean vehicle credits under other IRS provisions.
2. What if I refinance my loan?
Refinanced amounts may qualify if tied to the original purchase, but consult Pub 6126 for details.
3. How do I download IRS Publication 6126?
You can download the PDF directly from the IRS website: https://www.irs.gov/pub/irs-pdf/p6126.pdf.
For more in-depth rules, review the proposed regulations in the Federal Register or IRS Notice 2025-57. Stay updated, as tax laws can change—always check IRS.gov for the latest guidance. If you’re buying a new car in 2026, this deduction could make your purchase even more affordable!