๐ It’s official: the IRS rules for the new ๐๐๐ซ-๐ฅ๐จ๐๐ง ๐ข๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐๐๐๐ฎ๐๐ญ๐ข๐จ๐ง took effect today, November 9, and it’s real money for working families.
Here’s how it works. Buy a ๐ง๐๐ฐ, ๐๐ฆ๐๐ซ๐ข๐๐๐ง-๐๐ฌ๐ฌ๐๐ฆ๐๐ฅ๐๐ vehicle with a loan after December 31, 2024, and you can deduct the interest, ๐ฎ๐ฉ ๐ญ๐จ $๐๐,๐๐๐ ๐ ๐ฒ๐๐๐ซ, for 2025 through 2028. Best part: it’s ๐๐๐จ๐ฏ๐ ๐ญ๐ก๐ ๐ฅ๐ข๐ง๐, meaning it works whether you itemize or take the standard deduction. Your lender sends an interest statement, and the ๐๐๐ goes on your return.
Now the fine print. It ๐ฉ๐ก๐๐ฌ๐๐ฌ ๐จ๐ฎ๐ญ once income passes $100,000 single or $200,000 married filing jointly. Used cars don’t count. Leases don’t count. Foreign-assembled doesn’t count.
And remember: ๐ ๐๐๐๐ฎ๐๐ญ๐ข๐จ๐ง ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐๐ข๐ฌ๐๐จ๐ฎ๐ง๐ญ. Pay $4,000 in interest at the 12% bracket and you get back about $480. You paid $4,000 to get $480. That’s a coupon on a bill you volunteered for.
The deduction only matters if the car fits my ๐๐๐ซ ๐๐ฎ๐๐ซ๐๐ซ๐๐ข๐ฅ๐ฌ:
1. Keep ๐๐ฅ๐ฅ car payments under ๐๐% ๐จ๐ ๐ฒ๐จ๐ฎ๐ซ ๐ญ๐๐ค๐-๐ก๐จ๐ฆ๐ ๐ฉ๐๐ฒ. Add housing’s 30% and that’s nearly a whole paycheck gone.
2. ๐๐จ ๐ก๐ข๐ฌ-๐๐ง๐-๐ก๐๐ซ ๐๐๐ซ ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ๐ฌ. Two drivers, two cars, fine. Two notes at once? No.
3. Total value of everything with a motor stays under ๐๐% ๐จ๐ ๐ฒ๐จ๐ฎ๐ซ ๐๐ง๐ง๐ฎ๐๐ฅ ๐ข๐ง๐๐จ๐ฆ๐.
4. ๐
๐ข๐ง๐๐ง๐๐ ๐-๐ ๐ฒ๐๐๐ซ๐ฌ ๐ฆ๐๐ฑ, ๐ฉ๐ซ๐๐๐๐ซ๐๐๐ฅ๐ฒ ๐. Longer terms put you upside down fast.
5. ๐๐๐ฏ๐๐ซ ๐ฅ๐๐๐ฌ๐. A lease is forever payments on a car you’ll never own.
6. ๐๐๐๐ฉ ๐ญ๐ก๐ ๐๐๐ซ ๐๐ญ ๐ฅ๐๐๐ฌ๐ญ ๐๐ ๐ฒ๐๐๐ซ๐ฌ. Three years of payments, seven years payment-free. That’s how you pimp the ride instead of the ride pimping you.
Bottom line: take every single legal deduction you’re owed. Just never let a tax break talk you into breaking the guardrails.
๐๐ก๐ ๐๐๐ซ๐ซ ๐๐๐ฉ๐จ๐ซ๐ญ: ๐
๐ข๐ง๐๐ง๐๐ข๐๐ฅ ๐๐๐ฏ๐ข๐๐ ๐๐จ๐ฎ ๐๐๐ง ๐๐๐ง๐ค ๐๐ง!
๐๐๐๐ ๐ ๐๐จ๐ง๐๐ฒ ๐๐จ๐๐๐ก ๐ญ๐จ ๐ก๐๐ฅ๐ฉ ๐ฒ๐จ๐ฎ ๐๐๐ญ ๐ ๐๐ซ๐ข๐ฉ ๐๐ง ๐๐จ๐ฎ๐ซ ๐๐จ๐ง๐๐ฒ? ๐๐ข๐ญ ๐ฆ๐ up!
โ๐พ Damon Carr, Financial Planner, Money Coach, Tax Pro & Real Talk Specialist
#CarLoan #Taxes #PersonalFinance #TheCarrReport #GetAGripOnYourMoney
๐ฅ Watch the video: https://www.youtube.com/shorts/uHQ6iLh8dcE