'One Big Beautiful Bill' Promises a $10K Auto Loan Tax Break -- But 97% of Owners Will See Zero Savings

Refinancing through Caribou Can Save Millions Up to $1,692 A Year —Five Times More Than the New Auto Loan Deduction

DENVER, July 16, 2025 /PRNewswire/ -- American drivers are understandably excited about a new tax break of up to $10,000 per year touted in the recently passed One Big Beautiful Budget Bill Act (H.R. 1). However, according to Caribou, a leading auto refinance platform, a closer look at the law and the latest auto data reveals a different reality: only a small fraction of car owners are expected to qualify for this tax deduction. For those few who do, the average annual tax savings will be approximately $333—not $10,000—based on a typical new car loan amount of $41,720, an average interest rate of 6.73%, and a loan term of 68.63 months (Experian).

The Fine Print Matters: Strict Eligibility Requirements
The new deduction comes with specific limitations that significantly restrict who can benefit:

• Purchase Date: The vehicle must have been purchased on or after January 1, 2025.
• U.S. Assembly: The car must be for personal use and assembled in the United States (VIN starts with 1, 4, or 5).
• Income Thresholds: The deduction begins phasing out at a modified adjusted gross income (MAGI) of $100,000 for single filers ($200,000 for joint filers), with no deduction available if your MAGI exceeds $149,000 ($249,000 for joint filers).

Estimated Eligibility: A Small Slice of the Pie
Caribou estimates fewer than 3% of the 100 million Americans with auto loans, approximately 2.8 million Americans, will actually qualify for the new tax deduction. This calculation is based on:

• About 13 million new cars are expected to be sold for personal use in 2025 (Cox Automotive).
• Roughly 50% of new vehicles sold in the U.S. are assembled in the U.S. (The White House).
• About 57% of new cars are financed with a loan (TransUnion).
• Approximately 76.1% of U.S. consumers fall below the income thresholds for the full deduction (Statista).
• There are approximately 100 million auto loans in the US (CFPB).

Why Refinancing Offers 5X the Tax Savings for Millions More
Millions who won't qualify for the new deduction can still significantly lower their monthly payments and reduce total interest costs through auto refinancing. Unlike the limited tax deduction, refinancing is broadly available and delivers real, immediate financial relief.

Refinancing offers a powerful alternative for drivers looking to save on their auto loans—regardless of their car's age, type, where it was assembled, or their income level. While the new deduction is out of reach for most Americans, refinancing is widely accessible and can deliver even greater, consistent savings.

Caribou customers can slash their monthly payments by an average of $141—adding up to $1,692 saved each year through refinancing, which is over five times the average annual savings from the new tax deduction. These savings are broadly available to borrowers—without all of the restrictions imposed by the new tax law, and without phase outs based on income. And, if a borrower happens to be one of the lucky few who will qualify for the deduction, they can still refinance and combine both benefits for even more substantial savings.

"The reality is that only a small fraction of borrowers will qualify for the new deduction, and even fewer will see the touted $10,000 in annual savings," said Simon Goodall, CEO of Caribou. "Refinancing is a practical, proven solution available to most drivers. At Caribou, our mission is to empower people to take control of their car loans and access meaningful savings with ease. We can help refinance any vehicle—new or used, regardless of when you bought it—and help you save more, with no income limits or assembly requirements."

Key Takeaway: Don't Fall for the Hype
The new auto loan tax deduction may sound significant, but its strict eligibility criteria means it will help very few. Refinancing car loans is a surer, more accessible way to deliver real money back in American's pockets. Caribou's platform makes it simple for drivers to check their eligibility and potential savings—quickly, easily, and with no impact on their credit score. Visit Caribou at www.caribou.com.

About Caribou
Founded in 2016 and based in Denver, CO, Caribou helps drivers take control of their car loan with real savings, trusted lending partners, and expert help every step of the way. Through its advanced technology and friendly loan advisors, Caribou makes the entire auto refinancing process quick, easy, and transparent. See how you could save at www.caribou.com.

SOURCE Caribou Financial