The Short Version
- The One Big Beautiful Bill Act (signed July 4, 2025) lets you deduct up to $10,000 a year of interest on a loan for a new vehicle, for tax years 2025 through 2028.
- The vehicle must be new, financed, bought for personal use, and have its final assembly in the United States.
- You can take it whether you itemize or use the standard deduction.
- Several Kias are built in Georgia, including the Telluride, Telluride Hybrid, Sorento, Sportage, EV9 and EV6.
Kias Built in the USA
Kia assembles these models in Georgia. Final assembly is what counts, so check the specific vehicle.
| Model | Notes | Shop |
|---|---|---|
| Telluride and Telluride Hybrid | Built in West Point, Georgia | View inventory |
| Sorento (gas) | Gas models built in Georgia; Sorento Hybrid and Plug-In Hybrid are imported | View inventory |
| Sportage and Sportage Hybrid | Built in Georgia; some Sportage Hybrids still come from Korea, so check each one | View inventory |
| EV9 and EV6 | Built in West Point, Georgia | View inventory |
Quick check: a VIN that starts with 5 and a window sticker listing final assembly in the United States. You can also run the VIN through the NHTSA VIN Decoder. We'll check it with you before you buy.
Who Qualifies
The Vehicle
New, with original use starting with you. Final assembly in the United States. A car, minivan, van, SUV, pickup or motorcycle rated under 14,000 lbs GVWR, bought for personal use rather than business.
The Loan
Taken out after December 31, 2024, used to buy the vehicle and secured by a first lien on it. Leases don't qualify, and neither does interest on negative equity rolled in from a trade-in.
Your Income
The full $10,000 limit applies up to $100,000 of modified adjusted gross income ($200,000 married filing jointly). Above that, it drops $200 for every $1,000 of income and is gone at $150,000 ($250,000 joint).
Income Limit Example
A single filer with $120,000 of modified adjusted gross income is $20,000 over the $100,000 threshold. The $10,000 limit drops by $200 × 20 = $4,000, so up to $6,000 of interest could be deducted that year. Most new-car loans generate well under that, so the limit matters mainly for higher earners and larger loans.
What Doesn't Count
- Leases, including lease buyouts
- Used and certified pre-owned vehicles
- Cash purchases (there's no loan interest)
- Vehicles with final assembly outside the U.S.
- Vehicles bought mainly for business use
What It Could Be Worth
Illustrations only, not rate quotes. These assume the full MSRP is financed at 7% APR for 72 months with no money down.
| Vehicle | MSRP* | Payment | Year-1 Interest | Tax Effect at 22% |
|---|---|---|---|---|
| 2027 Sportage Hybrid X-Line AWD | $35,790 | $610/mo | $2,348 | $516 |
| 2027 Telluride EX AWD | $45,790 | $781/mo | $3,004 | $661 |
| 2027 Telluride Hybrid EX AWD | $48,490 | $827/mo | $3,181 | $700 |
| 2026 EV9 Wind AWD | $63,900 | $1,089/mo | $4,192 | $922 |
*Starting MSRP on kia.com as of October 2026, excluding destination, tax, fees and options. Federal only. Tax effect = interest × 22% and is not a promise of savings. A vehicle delivered in November or December has only a month or two of 2026 interest, so most of the benefit shows up on your 2027 and 2028 returns. The deduction is scheduled to end after the 2028 tax year.
How to Claim It
- Watch for Form 1098-VLI. Lenders that receive $600 or more of qualifying interest send you a Vehicle Loan Interest Statement after the end of the year.
- Report the VIN. The vehicle identification number has to be included on your return. For 2025, the IRS added Schedule 1-A to Form 1040 for this and other new deductions.
- Keep your purchase paperwork. The retail contract shows the vehicle was new and when the loan started.
- Refinancing. A refinanced loan can still qualify up to the balance of the original loan if it stays secured by the same vehicle.
Loan Interest Deduction or Business Write-Off, Not Both
This deduction is for vehicles bought for personal use. Business owners using a vehicle mostly for work may be better served by Section 179 and bonus depreciation, which apply to Kias over 6,000 lbs. See the Section 179 guide.
Financing a New Kia at Emich Kia
Family-owned since 1922 at 1260 S. Colorado Blvd. in Denver.
- We'll show you the window sticker and VIN so you can confirm US final assembly on the exact vehicle.
- Apply for financing online before you visit.
- Value your trade and use the equity as your down payment.
Car Loan Interest Deduction: FAQ
Which Kias qualify for the car loan interest deduction?
New Kias with final assembly in the United States. Kia builds the Telluride, Telluride Hybrid, Sorento (gas), Sportage, Sportage Hybrid, EV9 and EV6 in Georgia. Some Sportage Hybrids are still imported, so confirm the window sticker or VIN of the vehicle you buy.
How much car loan interest can I deduct?
Up to $10,000 a year for tax years 2025 through 2028. The limit shrinks by $200 for each $1,000 of modified adjusted gross income over $100,000 ($200,000 married filing jointly).
Do I have to itemize to get it?
No. The deduction is available whether you itemize or take the standard deduction.
Does a lease qualify?
No. Only loans used to buy the vehicle and secured by a lien on it qualify. A vehicle you lease and later buy out isn't considered new, so the buyout loan doesn't qualify either.
Does a used car qualify?
No. The vehicle's original use has to start with you, so used and certified pre-owned vehicles don't qualify.
What paperwork will I need?
Your lender's Form 1098-VLI showing interest paid, the vehicle's VIN for your return, and your purchase contract. Save the statement your lender sends after the end of the year.
Can I use this and Section 179 on the same vehicle?
Generally no. The interest deduction is for personal-use vehicles and Section 179 is for vehicles used mostly for business, so a vehicle fits one or the other.
Shop a Georgia-Built Kia
Browse US-built models in stock or get pre-approved online.
Shop US-Built Kias Apply for FinancingSources: IRC §163(h)(4) and §6050AA as added by the One Big Beautiful Bill Act; Treasury Decision 10054 (final regulations, September 2026). Tax rules can change. This page is general information, not tax, legal or accounting advice. Consult a qualified tax professional about your situation.