How Much You Can Save on New Car Purchases in Every State Under Trump’s Tax Bill

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Millions of American car buyers will soon get some tax relief thanks to the One Big Beautiful Bill Act (OBBBA) signed by President Donald Trump on July 4. The tax break is taking effect starting from 2025 and running through the end of 2028 for auto loans on new car purchases. However, the deduction has income limitations, and not all vehicles qualify. At the same time, the OBBBA eliminated the federal tax credit on electric vehicles after September 30, 2025 (barring a few loophole EV purchases viable past that cutoff date).

So how much can you save with the OBBBA? Let’s break down how it works and what your new car purchase means for your taxes.

How Much Is the New Car Loan Deduction and Which Vehicles Qualify?

The new OBBBA allows car buyers to deduct up to $10,000 in auto loan interest each year. Unlike some tax deductions, car buyers can take advantage of the tax break whether they itemize or take the standard deduction.

To qualify for the deduction, the vehicle must meet the following requirements:

• New cars assembled in the United States
• It applies to cars, SUVs, minivans, vans, sport utility vehicles, pickup trucks and motorcycles
• The vehicle must weigh less than 14,000 pounds
• For personal use (not commercial)

The deduction excludes used cars and leased vehicles, which further limits the tax break.

What Are the Income Limits?

There are also income limits built into the law. You can get the full tax break if you’re a single taxpayer with a modified adjusted gross income (MAGI) of not more than $100,000 or married filing jointly with a MAGI not exceeding $200,000.

The auto loan deduction shrinks when MAGI exceeds the above thresholds, with the amount reduced by $200 for every $1,000 above the cutoff. Additionally, the deduction completely phases out high-income earners earning $150,000 for single filers and $250,000 for joint filers.

How Much Can You Save on Your New Car?

Here are the savings for each state:

California

• Savings per tax return using the standard deduction: $182.77
• Savings per tax return using itemization: $5,221
• Average savings per senior: $1,386.60
• Annual tax savings per new car: $318

Oregon

• Savings per tax return using the standard deduction: $194.73
• Savings per tax return using itemization: $5,502
• Average savings per senior: $1,131.84
• Annual tax savings per new car: $300.78

Massachusetts

• Savings per tax return using the standard deduction: $190.19
• Savings per tax return using itemization: $5,507
• Average savings per senior: $1,110.96
• Annual tax savings per new car: $263.70

Connecticut

• Savings per tax return using the standard deduction: $192.41
• Savings per tax return using itemization: $5,495
• Average savings per senior: $1,386.60
• Annual tax savings per new car: $266.92

Hawaii

• Savings per tax return using the standard deduction: $194.16
• Savings per tax return using itemization: $5,521
• Average savings per senior: $1,388.04
• Annual tax savings per new car: $319.18

New Jersey

• Savings per tax return using the standard deduction: $188.18
• Savings per tax return using itemization: $5,339
• Average savings per senior: $1,387.08
• Annual tax savings per new car: 276.67

Virginia

• Savings per tax return using the standard deduction: $192.44
• Savings per tax return using itemization: $5,383
• Average savings per senior: $1,134
• Annual tax savings per new car: $307.19

New York

• Savings per tax return using the standard deduction: $187.79
• Savings per tax return using itemization: $5,510
• Average savings per senior: $970.56
• Annual tax savings per new car: $285.89

Delaware

• Savings per tax return using the standard deduction: $197.55
• Savings per tax return using itemization: $5,586
• Average savings per senior: $1,150.56
• Annual tax savings per new car: $309.48

Maryland

• Savings per tax return using the standard deduction: $170.26
• Savings per tax return using itemization: $2,945
• Average savings per senior: $1,386
• Annual tax savings per new car: $287.95

Iowa

• Savings per tax return using the standard deduction: $180.00
• Savings per tax return using itemization: $4,511
• Average savings per senior: $1,009.92
• Annual tax savings per new car: $249.39

Rhode Island

• Savings per tax return using the standard deduction: $193.83
• Savings per tax return using itemization: $5,711
• Average savings per senior: $972.48
• Annual tax savings per new car: $270.52

New Hampshire

• Savings per tax return using the standard deduction: $209.20
• Savings per tax return using itemization: $5,853
• Average savings per senior: $1,150.56
• Annual tax savings per new car: $298.81

Florida

• Savings per tax return using the standard deduction: $161.08
• Savings per tax return using itemization: $4,204
• Average savings per senior: $992.64
• Annual tax savings per new car: $260.31

Utah

• Savings per tax return using the standard deduction: $200.67
• Savings per tax return using itemization: $5,119
• Average savings per senior: $1,396.92
• Annual tax savings per new car: $317.28

North Dakota

• Savings per tax return using the standard deduction: $178.88
• Savings per tax return using itemization: $4,541
• Average savings per senior: $1,008
• Annual tax savings per new car: $279.49

Wyoming

• Savings per tax return using the standard deduction: $183.17
• Savings per tax return using itemization: $4,581
• Average savings per senior: $1,010.40
• Annual tax savings per new car: $309.73

Illinois

• Savings per tax return using the standard deduction: $198.05
• Savings per tax return using itemization: $5,640
• Average savings per senior: $982.08
• Annual tax savings per new car: $311.64

Minnesota

• Savings per tax return using the standard deduction: $204.19
• Savings per tax return using itemization: $5,741
• Average savings per senior: $1,001.76
• Annual tax savings per new car: $296.36

Colorado

• Savings per tax return using the standard deduction: $195.52
• Savings per tax return using itemization: $4,566
• Average savings per senior: $1,146.96
• Annual tax savings per new car: $328.57

Nevada

• Savings per tax return using the standard deduction: $193.39
• Savings per tax return using itemization: $5,612
• Average savings per senior: $1,109.52
• Annual tax savings per new car: $361.74

South Dakota

• Savings per tax return using the standard deduction: $182.13
• Savings per tax return using itemization: $4,585
• Average savings per senior: $1,003.20
• Annual tax savings per new car: $259.18

Washington

• Savings per tax return using the standard deduction: $199.15
• Savings per tax return using itemization: $2,579
• Average savings per senior: $1,140.48
• Annual tax savings per new car: $335.09

Nebraska

• Savings per tax return using the standard deduction: $177.59
• Savings per tax return using itemization: $4,481
• Average savings per senior: $1,013.28
• Annual tax savings per new car: $244.77

Montana

• Savings per tax return using the standard deduction: $172.08
• Savings per tax return using itemization: $4,375
• Average savings per senior: $1,013.76
• Annual tax savings per new car: $254.34

Kansas

• Savings per tax return using the standard deduction: $177.82
• Savings per tax return using itemization: $4,471
• Average savings per senior: $1,002.72
• Annual tax savings per new car: $256.39

North Carolina

• Savings per tax return using the standard deduction: $170.22
• Savings per tax return using itemization: $4,324
• Average savings per senior: $994.08
• Annual tax savings per new car: $252.51

Pennsylvania

• Savings per tax return using the standard deduction: $168.60
• Savings per tax return using itemization: $4,345
• Average savings per senior: $988.32
• Annual tax savings per new car: $222.52

Idaho

• Savings per tax return using the standard deduction: $183.61
• Savings per tax return using itemization: $4,509
• Average savings per senior: $1,025.76
• Annual tax savings per new car: $275.27

Arizona

• Savings per tax return using the standard deduction: $198.67
• Savings per tax return using itemization: $3,866
• Average savings per senior: $1,002.24
• Annual tax savings per new car: $359.80

Texas

• Savings per tax return using the standard deduction: $168.23
• Savings per tax return using itemization: $4,299
• Average savings per senior: $996.96
• Annual tax savings per new car: $309.26

Vermont

• Savings per tax return using the standard deduction: $171.02
• Savings per tax return using itemization: $4,421
• Average savings per senior: $1,008.48
• Annual tax savings per new car: $228.80

Georgia

• Savings per tax return using the standard deduction: $155.83
• Savings per tax return using itemization: $4,042
• Average savings per senior: $984.96
• Annual tax savings per new car: $255.74

Maine

• Savings per tax return using the standard deduction: $173.30
• Savings per tax return using itemization: $4,445
• Average savings per senior: $1,003.20
• Annual tax savings per new car: $236.59

Alaska

• Savings per tax return using the standard deduction: $208.62
• Savings per tax return using itemization: $5,929
• Average savings per senior: $1,385.52
• Annual tax savings per new car: $390.52

South Carolina

• Savings per tax return using the standard deduction: $169.01
• Savings per tax return using itemization: $4,315
• Average savings per senior: $1,001.76
• Annual tax savings per new car: $249.79

Missouri

• Savings per tax return using the standard deduction: $174.38
• Savings per tax return using itemization: $4,432
• Average savings per senior: $991.20
• Annual tax savings per new car: $244.52

Alabama

• Savings per tax return using the standard deduction: $170.67
• Savings per tax return using itemization: $4,330
• Average savings per senior: $988.80
• Annual tax savings per new car: $270.35

Wisconsin

• Savings per tax return using the standard deduction: $174.67
• Savings per tax return using itemization: $4,455
• Average savings per senior: $1,005.60
• Annual tax savings per new car: $227.13

Ohio

• Savings per tax return using the standard deduction: $169.23
• Savings per tax return using itemization: $4,390
• Average savings per senior: $981.12
• Annual tax savings per new car: $224.54

Michigan

• Savings per tax return using the standard deduction: $170.61
• Savings per tax return using itemization: $4,398
• Average savings per senior: $994.56
• Annual tax savings per new car: $207.33

Tennessee

• Savings per tax return using the standard deduction: $175.07
• Savings per tax return using itemization: $1,349
• Average savings per senior: $988.32
• Annual tax savings per new car: $272.99

Indiana

• Savings per tax return using the standard deduction: $174.94
• Savings per tax return using itemization: $4,461
• Average savings per senior: $989.28
• Annual tax savings per new car: $238.98

Oklahoma

• Savings per tax return using the standard deduction: $122.85
• Savings per tax return using itemization: $3,359
• Average savings per senior: $982.08
• Annual tax savings per new car: $217.75

New Mexico

• Savings per tax return using the standard deduction: $117.76
• Savings per tax return using itemization: $3,381
• Average savings per senior: $976.32
• Annual tax savings per new car: $237.79

Arkansas

• Savings per tax return using the standard deduction: $124.09
• Savings per tax return using itemization: $3,388
• Average savings per senior: $990.24
• Annual tax savings per new car: $219

Kentucky

• Savings per tax return using the standard deduction: $123.43
• Savings per tax return using itemization: $3,399
• Average savings per senior: $987.36
• Annual tax savings per new car: $192.60

Mississippi

• Savings per tax return using the standard deduction: $120.52
• Savings per tax return using itemization: $3,365
• Average savings per senior: $970.08
• Annual tax savings per new car: $210.21

Louisiana

• Savings per tax return using the standard deduction: $119.69
• Savings per tax return using itemization: $3,371
• Average savings per senior: $973.44
• Annual tax savings per new car: $226.76

West Virginia

• Annual tax savings per new car: $219.50
• Savings per tax return using the standard deduction: $126.80
• Savings per tax return using itemization: $3,475
• Average savings per senior: $984.96

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