New deduction for interest on certain personal car loans

One of the lesser-known provisions of the One Big Beautiful Bill Act is a new deduction for certain vehicle loan interest. This provision allows taxpayers to deduct up to $10,000 in interest on loans to buy new cars, minivans, vans, SUVs, pickup trucks, and motorcycles. Vehicles must be purchased for personal—not business—use, and the final assembly must occur in the United States. (Other conditions and requirements apply.) This deduction for qualified loans that originated after Dec. 31, 2024, and before 2029 is available for both taxpayers who itemize and those who take the standard deduction. However, it has limitations. Used and leased vehicles don’t qualify, and the deduction phases out for taxpayers with modified adjusted gross income above $100,000 (individuals) and $200,000 (joint filers). Taxpayers must include the vehicle identification number of the applicable vehicle on their returns for the tax year.

Clean energy tax deadlines have changed

The recently enacted One Big Beautiful Bill Act eliminated several business tax credits created or expanded by the Inflation Reduction Act. Some remain for a short time, but others have already expired. For example, the Alternative Fuel Vehicle Refueling Property Credit, worth up to $100,000 per item for equipment that dispenses clean-burning fuel or recharges electric vehicles, now applies only to property placed in service by June 30, 2026. Meanwhile, the Section 179D Energy Efficient Commercial Buildings Deduction, available since 2006, will end for projects beginning construction after that same date. And then there’s the Qualified Commercial Clean Vehicle Credit. It’s worth $7,500 to $40,000, depending on vehicle weight, but now applies only to vehicles acquired by September 30, 2025. In all cases, deadlines have been significantly shortened, so those interested in taking advantage of these credits or deductions should act quickly.

Give now or later? A tax-savvy tip for giving assets  

If you’re planning to give assets to loved ones, and federal gift and estate taxes aren’t a concern, think about the capital gains impact. Inherited assets receive a “step-up” in basis to their fair market value at your death, potentially resulting in much lower taxes if your heirs sell them. Gifts, however, keep your original basis, which can mean higher taxable gains for the recipient. If your heirs are in a high tax bracket, holding onto highly appreciated assets until death may be best. But if they’re in a lower bracket and you want to divest appreciated assets, gifting now could save the family money, the assets might sell at a lower tax cost, possibly even zero. Careful timing of gifts and inheritances can help you pass on more wealth and pay less tax.

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