Trump's Car-Loan Tax Break Isn't Proving Very Popular

President Trump's auto-loan interest tax perk is sputtering out of the gate. The new deduction, which lets taxpayers write off up to $10,000 in car-loan interest, has been claimed by just over 1.1 million filers as of April 8—far fewer than expected and a fraction of all returns, reports Politico. "We're seeing lower-than-expected uptake," said Andrew Lautz of the Bipartisan Policy Center, as Republicans had pitched the measure as both inflation relief and a nudge to bring auto production back to the US. MSN notes that auto-loan debt in the US reached $1.6 trillion at the end of last year, with the average monthly payment on a new car hitting $772.

The problem: layers of fine print and limited savings. Only certain new cars qualify—purchased after Dec. 31, 2024, assembled in the US, and financed with loans—a pool the IRS puts at about 6 million vehicles. Income caps begin to kick in at $200,000 for couples, knocking out many buyers of new cars. And most borrowers don't pay anywhere near $10,000 in annual interest; the average first-year interest tab is about $3,800, worth roughly $600 in tax savings. That pales next to the now-eliminated $7,500 electric-vehicle credit, which car analysts say actually influenced buying decisions. Trump is heading to Nevada and Arizona this week to sell the tax breaks, notes Politico.