This year brought one of the most significant pieces of tax legislation in recent memory, what many are calling the "Big Beautiful Bill." It introduces several new provisions designed to impact everyday taxpayers, and over the coming months, more details will continue to emerge.

To start, here's one of the most practical and immediate changes:

Deducting auto loan interest: A game-changer

For the first time, taxpayers can deduct interest paid on new car loans for personal vehicles. This provision is available for vehicles purchased between 2025 and 2028.

Key details to know:

• New vehicles only (used cars don't qualify).

• Loan must be secured by the vehicle itself (not a signature or personal loan).

• Final assembly must occur in the United States.

• Deduction capped at $10,000 of interest per year.

• Available to both itemizers and non-itemizers.

• Income phaseouts apply: they begin at $100,000 for single filers and $200,000 for married filers, with full phaseout at $150,000 and $250,000, respectively.

Because this deduction is above-the-line, it reduces taxable income directly, no matter how you file.

Why it matters

The average interest rate on new car loans currently hovers around 8.6%. This deduction reduces the effective cost of borrowing, making financing a new vehicle more affordable for many households.

While paying cash is still the least expensive way to purchase a car, this provision ensures that the cost is at least partially offset through tax savings for those who need to finance.

Looking ahead

The auto loan deduction is just one example of the changes contained in the Big Beautiful Bill. Additional provisions, each with its own rules, income limits, and documentation requirements, will be clarified and rolled out in the months ahead.

This particular deduction is effective immediately for 2025 purchases and runs through the end of 2028. Whether Congress extends it beyond that remains to be seen.

Planning considerations

If you're considering buying a new car in the next few years, it may be worth timing the purchase within this four-year window. Remember that the loan must meet all requirements—it must be secured by the vehicle, assembled in the U.S., and reported with the proper VIN documentation.

As more pieces of the Big Beautiful Bill become clear, staying informed will be key to making smart financial decisions.