President Trump signing the One Big Beautiful Bill into law during Fourth of July not only slashed the annual budget of the Consumer Financial Protection Bureau, but it might also have helped consumers at tax time depending on what vehicle they financed.

The American Financial Services Association recapped that the new law allows for auto loan interest to be tax deductible for new vehicles assembled in the United States and purchased between 2025 and 2028.

AFSA pointed out through a blog post that the deduction is capped at $10,000 and phases out at incomes between $100,000 and $150,000 for single filers and $200,000 and $250,000 for joint filers.

AFSA cited Cox Automotive estimates that indicated the average transaction price for a new vehicle was about $49,000 in May.

Based on AFSA calculations, a qualifying individual who finances such a vehicle with a 10% down payment and a 72-month loan at 6.5% interest would be eligible for a tax deduction of about $3,000 in the first year of ownership and roughly $1,800 annually on average over the life of the loan.

Potentially helpful to consumers, as well: the provision allows for interest on multiple auto loans to be deducted provided the total deduction remains under the $10,000 limit, according to AFSA.

“While implementation details may be hashed out by the Internal Revenue Service and other federal agencies, the auto loan interest deduction has the potential to aid a significant percentage of consumers as they consider whether to purchase a new vehicle,” AFSA said.

“AFSA continues to closely monitor the regulatory process for OBBB and will provide updates,” the association added.