WASHINGTON–Credit unions are going to need to brush up on where the final assembly points are for certain vehicles, as they are likely going to be fielding questions from members taking out auto loans.
HR 1, the giant reconciliation package signed by President Trump into law, includes a tax break for interest paid on auto loans that becomes a phased-out deduction from 2025-28. Individuals can deduct up to $10,000 in interest paid on a qualified loan—those originated after Dec. 31st, 2024—for a car, minivan, van, SUV, pickup truck or motorcycle if it has a gross vehicle weight rating of less than 14,000 lbs. and underwent final assembly in the United States.
Answering Questions
As Keith Schostag, director of federal compliance with America’s Credit Unions said during a call with the media, that last criterion is the one that will likely be leading to the most member questions.
Schostag said the new bill requires credit unions to file information with the IRS and furnish statements to taxpayers showing the interest the credit union received from the borrower during the taxable year, with the IRS charged with creating those forms to help CUs comply.
America’s Credit Union has also created a Q&A that Schostag said will be updated once the IRS guidance is published.
Additional Information Sources
When it comes to determining whether a vehicle’s final assembly took place in the United States, Schostag said he anticipates dealers will be able to provide that information, and that a tag/sticker that comes with the vehicle should also provide answers.
Borrowers/buyers can also input the VIN into an online “decoder” hosted by the National Highway Traffic Administration to get an answer, Schostag added.
