If you are considering buying a new vehicle in 2026, the White House just gave you some great news.
On Wednesday, January 7, U.S. Treasury Secretary Scott Bessent announced that the government is working on a significant tax break that would offer some much-needed relief to car buyers who are struggling to afford a new vehicle.
U.S. 2025 new-vehicle sales forecast
- GM: 2.83 million vehicles (+5.1% year over year); 17.3% market share
- Toyota: 2.52 million vehicles (+8.4% YoY); 15.5% market share
- Ford: 2.18 million vehicles (+5.6% YoY); 13.4% market share
- Hyundai: 1.84 million vehicles (+7.9% YoY); 11.3% market share
- Honda: 1.42 million vehicles (+0.6% YoY); 8.8% market share Source: Cox Automotive
The Treasury announced it is implementing a No Tax on American Car Loan Interest rule that offers eligible taxpayers a $10,000 deduction per year in auto loan interest for cars purchased during Trump’s second term.
“For millions of Americans, a car isn’t a luxury, it’s how you get to work, school, and childcare,” Bessent said on X.
“This deduction helps lower monthly costs and makes car ownership more affordable when families need it most. The tax cut also supports American workers by applying solely to U.S.-assembled vehicles, strengthening domestic manufacturing,” he said.
Bessent explained that the Treasury and the IRS are issuing clear rules on the tax break “so taxpayers know exactly how the deduction works.”
But only certain cars will be eligible for the tax break. Here are the criteria for taking advantage of the new rules.
U.S. Treasury Secretary Scott Bessent announced new tax breaks for certain cars.
Photo by Andrew Harnik on Getty Images
These vehicles are eligible for a new $10,000 automotive tax credit
In his X announcement, Secretary Bessent stated that U.S.-assembled vehicles purchased between 2025 and 2028 will be eligible for the tax credit; however, the program is somewhat more restrictive than the announcement suggests.
The One Big Beautiful Bill Act, signed into law on July 4, 2025, lays out the requirements for new car buyers to receive the relief. Individual car buyers making more than $100,000 and couples making more than $200,000 would see the benefits begin to phase out.
Related: Secretary Bessent drops U.S. auto loan deduction bombshell
The tax credit will only go to buyers who purchase cars assembled in the U.S. So even if you’re buying a Toyota, as long as it’s one of the nearly 2 million vehicles the company builds in the States annually, you’re eligible.
But popular imported models, even if they’re imported by one of the U.S. Big 3 automakers, are not covered.
New cars, SUVs, vans, pickup trucks, and motorcycles weighing under 14,000 pounds are eligible, but to qualify, the vehicle must be purchased for personal use, not business or commercial purposes, and its final assembly must be done in the U.S.
Final assembly refers to a process by which the major components of a vehicle — engine, transmission, body, and chassis — are fully integrated, and the vehicle is completed at a U.S.-based manufacturing plant, according to automotive expert Lauren Fix, previously told FOX Business, according to IndexBox.
Japanese automakers, in particular, have large manufacturing footprints in the U.S.
New car buyers looking to buy Japanese autos and receive tax credit will have a large supply to choose from
It’s no secret that the U.S. auto industry has become dominated by foreign brands over the past few decades.
While General Motors still has the highest market share at 17% and Ford ranks third with a 13% market share, foreign models from Asia round out the top five, according to Cox Automotive data.
Related: Millions of American drivers have cars with a serious issue lurking
Toyota ranks second with a 15% U.S. market share, while the Korean brand Hyundai ranks fourth with an 11% share. Toyota’s fellow Japanese brand, Honda, ranks fifth in the market, with a 9% share.
Despite its home-court advantage, Stellantis ranks sixth, with an 8% share.
Japanese auto manufacturers produced 3.28 million vehicles in the U.S.
Toyota sold over 2.3 million vehicles in the U.S. in 2024, a 3.7% year-over-year increase. Between April 2024 and March 2025, the company built 1.96 million units in the U.S.
Honda, Subaru, Nissan, Mazda, and Toyota combined employed nearly 75,000 manufacturing employees in the U.S. last year, so there is a good chance your favorite Japanese vehicle could be covered.