IRS Confirms Trump Tax Perk for New Made-in-USA Cars

Taxpayers purchasing a new vehicle in 2025 have an opportunity to benefit from an IRS tax deduction, provided the car is made in the United States. This tax break, promoted by former President Donald Trump, aims to incentivize domestic auto production.

Eligibility for the New Tax Break

The tax deduction applies to new cars that are assembled in the U.S. and purchased from 2025 to 2028. To verify eligibility, buyers can examine the vehicle information label or the VIN, which indicates the final assembly location.

Details on the Assembly Rule

• New cars must be assembled in the U.S. for the owner to qualify.
• Buyers can check their car’s VIN against the National Highway Traffic Safety Administration’s database.

However, not all new vehicles purchased in 2025 may qualify. Of the 25 most popular models sold domestically in 2024, 14 were solely assembled in the U.S. These include notable vehicles such as:

• Ford F-Series Trucks
• Chevy Silverado
• Tesla Model Y
• Ram Pickup Truck
• GMC Sierra
• Toyota Camry

Impact of the Deduction

If the deduction was in effect for 2024, approximately 4 million out of 7 million units sold that year would have qualified. This deduction is expected to cost an estimated $31 billion over the next decade, however the expected savings for individual taxpayers will be modest, typically around a few hundred dollars for a vehicle valued at $50,000.

Income Limits and Personal Use Requirement

The tax deduction has income thresholds, phasing out for single taxpayers earning $100,000 or more and married couples earning $200,000. Low-income buyers, who generally prefer used vehicles, may find themselves excluded from benefiting from this tax break.

To qualify for the tax deduction, buyers must intend for personal use of at least half the time. A proposed rule states that if the vehicle shifts to commercial use later, the tax break remains applicable. Additionally, lenders collecting over $600 in interest from car loans must report to the IRS.

As the automotive industry faces various economic challenges, the long-term effects of this tax incentive remain uncertain. Experts suggest that the main goal is to support and bolster domestic auto manufacturing and increase local car sales.