he “VIN Trick”: How to Claim the New $10,000 Auto Loan Deduction in 2026
By: Sarah Jenkins | Consumer Tax Analyst
Most people think the new “Auto Loan Interest Deduction” in the One Big Beautiful Bill (OBBB) is only for electric vehicles.
They are wrong.
For the 2026 filing season, this deduction applies to ANY new vehicle (gas, hybrid, or electric) — as long as it was assembled in the United States.
If you bought a new car in 2025, stop what you are doing. Go out to your driveway, look at the bottom of your windshield, and check the Vehicle Identification Number (VIN).
The first character of that code could be worth $10,000 in tax deductions.
The Rule: “Made in USA” Only
The IRS isn’t checking the brand (Ford vs. Toyota). They are checking the Assembly Point.
Many “foreign” cars (like the Toyota Camry or Honda Accord) are actually built in Kentucky or Ohio, making them eligible. Meanwhile, some “American” cars are built in Mexico, making them ineligible.
How do you know? You don’t need to Google it. Just look at the first digit of your VIN.
The “VIN Check” Table (Save This)
Use this chart to instantly see if your car loan interest is deductible.
| First Character of VIN | Country of Assembly | OBBB Deduction Status |
| 1, 4, or 5 | 🇺🇸 USA | ✅ ELIGIBLE (Up to $10,000) |
| 2 | 🇨🇦 Canada | ❌ Ineligible |
| 3 | 🇲🇽 Mexico | ❌ Ineligible |
| J | 🇯🇵 Japan | ❌ Ineligible |
| W | 🇩🇪 Germany | ❌ Ineligible |
| K | 🇰🇷 South Korea | ❌ Ineligible |
| L | 🇨🇳 China | ❌ Ineligible |
Pro Tip: If your VIN starts with 1, 4, or 5, you can deduct 100% of the interest paid on that loan in 2025 (capped at $10,000), regardless of whether you itemize or take the standard deduction.
Three Critical Requirements
Even if you have the right VIN, you must meet these three criteria to avoid an audit:
- New Cars Only: The car must have been purchased as “New” (not used/pre-owned) between Jan 1, 2025 and Dec 31, 2025.
- Income Cap: Your Modified AGI must be under $100,000 (Single) or $200,000 (Married).
- The “VIN” Line: On your tax software, do not skip the “Vehicle Information” screen. You MUST enter the full 17-digit VIN. If the system detects a “J” or “3” at the start, it will auto-reject the deduction.
How to Find Your Interest Amount
You do not need to call the bank.
- Log in to your auto lender’s website.
- Look for Form 1098-E (some lenders are using this student loan form for autos now) or your “Year-End Statement.”
- Look for the line: “YTD Interest Paid.”
Bottom Line: If you drive a Honda built in Alabama (VIN starts with 5), you get a tax break. If you drive a Chevy built in Mexico (VIN starts with 3), you get nothing. Check your VIN today.
Disclaimer: This article covers OBBB tax provisions for the 2025 tax year. Always verify details at IRS.gov.
Evan Cole Editor-in-Chief | Breaking News & Public Policy
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