Good morning. The IRS has finalized the rules for the new car loan interest deduction, and there are two things in it worth five minutes: the reason the truck in your company's name gets nothing extra, and a reporting duty that lands on any business that finances a vehicle for an individual.
Top story — The deduction is for the truck in your name, not your company's
Treasury and the IRS published final regulations on the Car Loan Interest Deduction on 8 September (91 FR 57214, TD 10054). They take effect 9 November 2026.
The core of it: for tax years beginning after 31 December 2024 and before 1 January 2029 — so 2025 through 2028 — qualified passenger vehicle loan interest is no longer treated as non-deductible personal interest. To qualify, the interest has to be paid on debt incurred by the taxpayer after 31 December 2024, for the purchase of, and secured by a first lien on, an applicable passenger vehicle for personal use. The vehicle's final assembly must have occurred in the United States; a taxpayer can rely on the VIN under 49 CFR 565, or on the final assembly point printed on the vehicle's label.
Read that list again and you can see why the truck financed by your company is not in it. This is a rule about personal interest. Interest on debt properly allocable to the conduct of a trade or business was never personal interest in the first place — it sits outside the disallowance under section 163(h)(2) and is deductible as a business expense. The new deduction does not give your LLC a second bite. It gives an individual one.
Now the part most coverage has missed. The personal-use test is taken once. Under the regulation, a taxpayer purchases the vehicle for personal use if, at the time the debt is incurred, they expect it to be used for personal use by themselves, their spouse, or a related individual under section 152(c)(2) or (d)(2) — "for more than 50 percent of the time." Commenters asked whether that determination is made annually or re-tested when use changes. Treasury and the IRS answered plainly: the personal-use requirement "must be satisfied at the time the indebtedness is incurred, and not an ongoing requirement," and "differences between expected use at the time the indebtedness is incurred and later actual use of the vehicle do not affect the personal use determination."
And on mixed use, the final rule went the taxpayer's way: a commenter warned the proposal would force anyone using a vehicle for both purposes to split the interest. The final regulations say taxpayers who use a vehicle for personal and business purposes "are not required to allocate interest between QPVLI and business interest, but may choose to do so."
Quick hits
The limits, exactly. The deduction is capped at $10,000 per federal tax return, regardless of filing status — and a taxpayer with more than one qualifying loan may aggregate the interest before applying the cap. Above that, the phaseout: the amount is reduced by $200 for each $1,000, or portion of $1,000, of modified adjusted gross income over $100,000 — over $200,000 for married couples filing jointly. Head of household filers asked for their own threshold and did not get one; the IRS declined, saying the statute sets two thresholds and head of household falls under the $100,000 one.
You do not have to itemize. The OBBBA added section 63(b)(7), which subtracts this deduction from adjusted gross income in computing taxable income. It is available to a taxpayer who takes the standard deduction — which is most of the people who work for you.
★ The sleeper: if you carry paper, you now file a return. New section 6050AA makes any person engaged in a trade or business who, in the course of that business, receives from any individual interest aggregating $600 or more in a calendar year on a specified passenger vehicle loan file an information return, and furnish a written statement to that individual. It must carry the amount of interest, the outstanding principal at the start of the year, the loan's origination date, and the year, make, model and VIN of the vehicle. Failures draw penalties under sections 6721 and 6722, and section 6011(e)(5) can force electronic filing once you file ten returns of any type in a year. If you have ever sold a used work truck to an employee on payments, or run any kind of in-house financing, that is you.
The Tip — Ask the question before you sign, not at tax time
The expensive mistake here is structural and it happens at the dealership, not in April. Because the test is applied at origination and never revisited, who signs the note and what you expect to do with the vehicle on that day are the whole ballgame. Before the next vehicle purchase, take the question to your CPA in this form: for this specific vehicle, is the household better off with the loan in my name — personal use expected over half the time, up to $10,000 of interest coming off income even without itemizing — or in the company's, where the interest is a business expense and the vehicle can be depreciated?
There is no universal answer. It turns on your income against the phaseout, how the vehicle will actually be used, what depreciation is worth to you, and how your entity is taxed. What you can do without advice is stop losing the option by accident: don't let the finance office decide the borrower's name, keep the paperwork that shows US final assembly, and note that the loan must be a purchase-money loan with a first lien — a home equity draw or an unsecured loan used to buy a truck is not the same instrument.
And if you finance anything for anyone, put the $600 threshold on your bookkeeper's list now rather than discovering it with a penalty notice.
Tool watch — [Not sponsored]
The VIN is the cheapest compliance record on this whole list. The National Highway Traffic Safety Administration runs a free VIN decoder at vpic.nhtsa.dot.gov that returns the plant and country of manufacture for any US-market vehicle. Run it before you sign, screenshot it, and staple it to the loan file. The regulation expressly lets a taxpayer rely on the VIN under 49 CFR 565 to establish where final assembly occurred — so a thirty-second lookup is the difference between a documented position and an argument.
That's the callout. See you next time.
The Callout — the business brief for the trades. We label every commercial placement: [Sponsor], [Affiliate], or [Not sponsored]. Today's Tool watch is our own honest read — no one paid for it. 231J Ramparts Road, Te Anau 9600, New Zealand · Unsubscribe anytime. Nothing in The Callout is tax advice. Vehicle financing decisions turn on your entity, your income and your own numbers — take this to your CPA before you sign anything.