IRS finalizes auto loan deductions

Welcome back. In today's Dollars and Cents, there are some changes to car loans and tax breaks you should know about. Local financial advisor Jason Matthews here to guide us through it, which is great. Glad you're here to talk about this because I hadn't really thought about it. We know that we can write off our mortgage interest if we're lucky enough to own a home. Right. But car loans as well. So what are this? There are some income levels and things to think about, though. Correct. So if you are a single filer making less than $100,000 a year or married filing jointly $200,000 a year, this could be a definitely additional tax break you can have. Okay, and this is, we're talking about just like a mortgage, the interest that you've paid on your car loan. So typically we get a form or we can look it up at our bank or wherever we financed our home. Is that the same with the car? Will we get a form or do we have to look that up ourselves? Yes. So now with this new provision, there's going to be a new tax form that you're going to receive every year for your for your auto loan. Now, it cannot be any car that you get. So you can't just buy, you know, a German car. It has to be finally assembled in the United States of America where they put that last bolt and screw into it to consider as built in America to get that tax deduction. OK, so, again, is our bank or finance are going going to do that homework or do we have to do the homework on that? You've got to do the homework. So before you go to that lot, go look up the VIN number and see what that is and say, oh, it's finally assembled maybe in South Carolina or in Detroit or somewhere in America, and then you know you'll be able to get that tax deduction. That's your job. You can't rely on your tax person to do it or the bank to do it. That's your job as an individual. So once we've bought the car, we'll get that note from the bank or the credit union or wherever we bought the car. But to go out and buy a car, check the VIN number. It will have that information. are there uh limits on how much the car costs because i know there's something about weight is that does that make it exclude EVs so it has to be 14 or about 14 16 000 pounds or less so it cannot be a huge commercial vehicle for that so it's going to qualify for most cars going to be able to qualify and then you remember it's only for from 2025 to 2028 unless congress extends it extends it because it was part of that one big beautiful tax bill and what's really nice is i was looking through the the kind of the fine print that you sent over to me to look through um it could help gig workers right if they fall under that because it it doesn't say it has to be all personal use so if you're using your car for both your you know say you're a a food delivery service right this you could be able to write this off correct and so that's one advantage so if you're a gig worker this could be a great break for you so you should look into that as well if this is the right fit for you. I think that's a huge point to make. And even if you're not a gig worker, the great benefit is if you file your standard tax deduction, you can still get this itemized deduction. You don't have to now switch over to itemized taxes. So still makes things quite simple for you. Yeah, that's a really big point. I'm glad you made that because a lot of times you just get the standard deduction unless you own a home or you have something big that moves you into that itemized. So this is just anybody who files typically a standard deduction can also have this write-off and it'll reduce their taxes correct absolutely okay good to know um anything else that we should know in terms of new taxes when we're thinking about end of year purchases yeah so i would say not for end of year purchases but i would say one thing you definitely want to consider as well at the end of the year is if you're over the age of 70 you're qualifying for a donation as remember this year you can now get additional deduction of two thousand dollars and still file your standard deduction so if you want to if you give and you want to give two thousand dollars or less you could deduct that now uh compared to previously had to be itemized taxes yeah you don't deduct those deductions okay and up to two thousand dollars correct so you can help out charity correct your taxes without filing itemized tax return that's a good okay that's good that's good to know because those are very complicated and some people move on from those and they don't want to itemize anymore or can't correct jason matthews thank you so much we appreciate it. Something good to think about if you are thinking about getting a new car. Check that VIN number. Right. And don't be rushing by a car just because of the tax deduction. Get it because you need it. That's true.