Quick Guide to the Made-in-America Auto-Loan Interest Deduction
If you're considering purchasing a new Hyundai between now and 2028, there's exciting news that could save you thousands on your taxes. The Made-in-America Auto-Loan Interest Deduction, part of recent federal legislation, allows qualified buyers to deduct auto loan interest from their federal taxes. This comprehensive guide will help you understand how this new benefit works and how it applies to your next Hyundai purchase at Hyundai of North Charleston.
Understanding the Auto Loan Interest Deduction
The Made-in-America Auto-Loan Interest Deduction represents a significant shift in how vehicle purchases can benefit your tax situation. For loans originated between 2025 and 2028, qualified buyers can deduct the interest paid on their auto loans directly from their federal taxes. Unlike many other tax benefits, this deduction doesn't require you to itemize, making it accessible to more taxpayers in North Charleston, SC, Goose Creek, SC, and surrounding areas.
How Much Could You Save?
| Loan Amount | APR* | Year‑1 Interest | Tax Deduction | Estimated Tax Savings† |
|---|---|---|---|---|
| $40,000 | 8.0% | $3,000 | $3,000 | $600 (20% tax rate) |
| $50,000 | 7.5% | $3,750 | $3,750 | $750 |
*APR based on average new‑car rate (July 2025). †Savings vary by tax bracket; consult a tax pro.
EV Tax Credit and Interest Deduction
One of the most exciting aspects of this new deduction is how it works alongside existing electric vehicle incentives. If you're considering an electric Hyundai, you can potentially stack multiple benefits. The federal EV tax credit of $7,500 (available through September 30, 2025) can be combined with the auto loan interest deduction for qualifying vehicles.
The Hyundai Ioniq 5 and Ioniq 9 specifically qualify for both incentives. These electric vehicles meet the requirements for the $7,500 federal tax credit and are eligible for the Big Beautiful Bill's new auto loan tax deduction. This means buyers in Charleston, SC, and beyond can maximize their tax benefits while transitioning to electric driving.
Claiming Your Interest Deduction
Understanding how to claim this deduction is crucial for maximizing your benefits. The process is designed to be straightforward, though proper documentation is essential.
First, maintain comprehensive records of your loan interest payments and keep your original purchase contract. These documents will be necessary when filing your taxes. When preparing your 2025-2028 tax returns, you'll enter the deductible amount on the designated IRS line. While specific guidance from the IRS is still pending, the framework ensures that claiming this benefit won't require complicated calculations or professional tax preparation for most filers.
The beauty of this deduction lies in its simplicity. Unlike mortgage interest or other deductions that require itemization, this auto loan interest deduction is available to all qualifying taxpayers, regardless of whether they take the standard deduction or itemize.
Important Considerations for Refinancing
If you're considering refinancing your auto loan in the future, it's important to understand how this might affect your deduction eligibility. The current guidance indicates that the deduction applies to interest paid on qualifying loans originated between 2025 and 2028. If you choose to refinance, only the interest on the original qualifying loan would count toward the deduction.
While the IRS is expected to provide additional clarification on refinancing scenarios, it's advisable to carefully consider the tax implications before refinancing a loan that qualifies for this deduction. Many buyers from Summerville, SC, and the Lowcountry region have found that the tax benefits of maintaining their original qualifying loan outweigh potential refinancing advantages.
Frequently Asked Questions
No, this deduction doesn't require itemization, making it accessible to taxpayers who take the standard deduction.
Models manufactured in America qualify for the deduction. This includes vehicles produced at Hyundai's U.S. manufacturing facilities.
Yes, you can stack this deduction with other applicable incentives, including the federal EV tax credit for qualifying electric vehicles.
Maintain your loan interest records and original purchase contract. These will be necessary when filing your taxes.
The deduction applies to qualifying auto loans originated between 2025 and 2028.
Visit Hyundai of North Charleston
Ready to learn more about how the Made-in-America Auto-Loan Interest Deduction can benefit your next vehicle purchase? Our team in North Charleston, SC, is ready to answer your questions and help you explore qualifying Hyundai models.
Our finance specialists stay current on all available incentives and have already helped customers from Myrtle Beach, SC, to Georgetown, SC, and beyond. We can help you understand how to maximize your tax benefits while finding the perfect Hyundai for your needs. Contact Hyundai of North Charleston and discover how the Made-in-America Auto-Loan Interest Deduction can work for you.
