CLEVELAND — Included in the recently signed GOP spending and tax cut plan is the USA Car Act, which provides relief from high interest rates for those who buy cars assembled in the U.S. by allowing new car buyers to deduct the interest. It's a benefit that the measure’s sponsor, Sen. Bernie Moreno (R-OH), says is above your standard deduction.
“It applies to new American-made automobiles, and it’s retroactive to January of this year. So anybody who bought a car this year, you took out a car loan, get ready to deduct that interest next year when you file your tax returns,” Moreno said.
The deduction is up to $10,000 a year, but for most new car buyers, that would only be a few thousand for the first year and decrease from there. Moreno estimates that someone with a $750 car payment would end up getting an additional $300 back come tax time.
For car dealers still trying to assess the impact of tariffs, it can only help drive those on the fence about buying a new car into their showrooms.
“Absolutely,” said Lou Vitantonio, head of the Greater Cleveland Auto Dealers Association, which represents 250 new vehicle dealerships in the 21-county region of Northeast Ohio. “It’s for 2025 to 2028 loans, it certainly will get people moving. It certainly will get people moving and certainly help the market, I think in the near future.”
“It’s a positive because interest rates have been high and you know it’s just another tool for us to help the affordability issue that we’ve been running against for a number of years with not only the vehicle prices you know inflating a little bit of tariff pressure on pricing as well,” Vitantonio said.
He said that the unknown tariff was actually a factor in the 16% jump dealers saw in year-to-year new car sales in June, putting them up 8% on the year.
Nationwide auto sales surged as people raced to buy vehicles before tariffs went into effect:
RELATED: Car sales jump in response to new tariffs
“But I think we're pulling ahead some of our sales that were probably going to happen in the second half of the year, because people are trying to avoid some of the increases that potentially may come. It still hasn't been figured out. As far as the tariffs, price increases in the interest rates,” Vitantonio said.
What the bill gives some auto dealers, it takes away from others. Moreno campaigned on ending the $7,500 tax credit for new plug-in electric vehicles, which he got in this bill, and he got that end date moved up to September 30.
“This gives dealers the time to go out and sell the vehicles that they've got the EVs that they've got,” said Moreno. “So, if you're watching this and you want to buy an electric vehicle, you better do it by September 30 because on October 1, it's gonna be a lot more expensive.”
“I’m not against electric cars, I’m against the government paying you to buy an electric car,” he said. “Buy whatever car you want, but the government shouldn't be giving somebody $7,500 to buy an EV and and making the price of that internal combustion car more expensive for somebody else is fundamentally unfair.”
