Can I deduct interest on a used-car loan under the new federal rule?

Generally no. The qualified passenger-vehicle loan-interest rules require the vehicle’s original use to begin with the taxpayer. An ordinary used-car purchase therefore does not qualify.

Dealer demonstrators can be different if the dealer primarily held the vehicle for sale. The vehicle must also satisfy the other requirements, including U.S. final assembly.

Maya PatelFederal Tax Reporter

Primary source: IRS IRB 2026-39 — T.D. 10054