NIADA will be delivering a request to Senate Finance Committee leadership for language clarifying the proposed tax deduction for interest paid on car loans applies to used vehicles.
NIADA supports the tax provision in H.R. 1, the “One Big, Beautiful Bill Act,” allowing for qualified borrowers to deduct the interest paid on auto loans up to $10,000 for tax years 2025 through 2028, provided that the financed vehicle is manufactured in the United States.
The House of Representatives passed the budget bill last week with the tax bill. The Senate will now take up consideration of the legislation.
The NIADA drafted the following letter to Senate Finance Committee Chairman Mike Crapo and Ranking Member Ron Wyden:
Dear Chairman Crapo and Ranking Member Wyden:
On behalf of the National Independent Automobile Dealers Association (NIADA) and its over 13,000 members nationwide, I respectfully request an important clarification regarding a tax provision included in H.R. 1, the “One Big, Beautiful Bill Act” (OBBBA), which was approved by the House of Representatives on May 22, 2025. The OBBBA contains a series of important tax relief measures designed to stimulate the economy and improve the lives of hardworking Americans. One such provision allows for qualified borrowers to deduct the interest paid on auto loans up to $10,000 for tax years 2025 through 2028, provided that the financed vehicle is manufactured in the United States.
NIADA strongly supports this provision, and we encourage you to include a similar provision in the Senate’s version of the OBBBA as you proceed with Committee and floor consideration. However, despite being well-intentioned, we believe the current language is inadvertently limiting. While NIADA and other stakeholders in the automotive industry interpret the implicit objective of this provision as applying to both new and used vehicle sales, the language itself is silent on that important distinction. Explicitly clarifying the applicability of this provision in the Senate’s legislative text will bring much-needed certitude to the used automobile industry and the customers it serves.
Demand for used automobiles has been steadily increasing over the past several years. This is partly due to supply chain concerns arising from the 2020 global pandemic, as well as the high cost of purchasing a new vehicle in today’s automotive market. NIADA members are committed to providing their customers with reliable vehicles at competitive prices and fair terms. Many of these customers come from modest means. Their vehicle is a financial lifeline. It provides safe transportation to and from work and enables them to manage their households and other personal commitments. By clarifying the provision, they can avail themselves of this modest tax deduction to help offset some of the costs associated with purchasing the vehicle and reallocate those funds to meet the myriad of demands occupying their lives. As consumers, this means redistributing those savings into local commerce and fostering economic growth, which is one of the OBBBA’s overarching objectives.
NIADA is ready to work with you and your staff to provide clear and concise language to ensure this important deduction does not unintentionally limit meaningful tax relief for a substantial and active segment of the automotive marketplace.
Thank you for considering this request. If you have any questions, please feel free to contact me directly at patrick@niada.com.
Sincerely,
Patrick O’Brien
Director of Government Affairs and Compliance
National Independent Automotive Dealers Association
