🚗 The car loan deduction most people don’t know to check

Filing Made Simple

🚗 The car loan deduction most people don’t know to check

For the first time since the 1980s, personal auto loan interest is deductible on your federal taxes. The One Big Beautiful Bill Act brought it back for 2025, up to $10,000 in interest paid on a qualifying new vehicle loan.

Most people assume they don’t qualify. Some of them are wrong.

The vehicle must have been finally assembled in the United States. Not designed in the U.S., not branded as American, actually assembled here. And the way you verify it is by entering your VIN into the NHTSA VIN Decoder. The result tells you exactly where final assembly happened.

Why does this matter? Because plenty of vehicles from Toyota, Honda and Hyundai have U.S. final assembly and qualify. And plenty of vehicles from U.S.-branded manufacturers don’t. A Toyota Camry built in Kentucky qualifies. A Ford Mustang assembled in Michigan qualifies. A BMW X5 assembled in South Carolina qualifies. A Chevrolet Blazer assembled in Mexico doesn’t. The brand is irrelevant. The VIN is everything.

The other requirements: the vehicle must be new (no prior owners), bought with a purchase loan (not a lease), and primarily for personal use. The loan must have originated after Dec. 31, 2024, but the deduction itself isn’t a one-time thing. It runs every tax year from 2025 through 2028, so if you financed your car in 2025, you can keep deducting the interest you pay in 2026, 2027, and 2028 too, as long as you’re still under the income limits. The deduction phases out above $100,000 MAGI for single filers and $200,000 for married filing jointly.

This deduction is claimed on Schedule 1-A, the new IRS form for all four OBBBA below-the-line deductions. It flows into Schedule 1 and then your 1040. If you’re using tax software, confirm it has the current Schedule 1-A. The IRS published the final form just weeks before the April 15 deadline, and some software was slow to update.

If you bought a new car in 2025 and financed it, check your VIN before you assume you’re out. Five minutes of your time could be worth a meaningful deduction.

👉 Find out if your car qualifies

Personal Finance

⏰ The 25% retirement penalty hiding in plain sight

A required minimum distribution, or RMD, is the amount the IRS makes you withdraw from tax-deferred retirement accounts (traditional IRAs, 401(k)s, 403(b)s, and similar) once you hit a certain age. The reasoning is straightforward, if a little undignified: the government let you defer tax on that money for 40years, and now it would like its share, please, and is no longer willing to wait politely for you to die.

RMDs begin at age 73 for anyone born between 1951 and 1959, and at 75 for anyone born in 1960 or later. Your first RMD has an extended deadline of April 1 of the year after you turn 73, but every RMD after that is due December 31.

Say you turn 73 in 2026. You can wait until April 1, 2027 to take your first RMD, but your second one is still due Dec. 31, 2027. Take advantage of that grace period and you’ve stacked two taxable distributions into a single calendar year, which can push you into a higher bracket, increase the taxable portion of your Social Security, and trigger higher Medicare premiums via IRMAA, all in one festive twelve-month spree.

The amount itself is calculated by dividing your prior year-end account balance by an IRS life expectancy factor. For most 73-year-olds, that works out to roughly 3.7% of the account balance per year, a number that grows as a percentage as you age, by design.

The SECURE 2.0 Act reduced the penalty for missing an RMD from 50% to 25%, and to 10% if you catch and correct the mistake within two years. On a $20,000 missed RMD, 25% is $5,000, on top of the income tax you’ll owe when you eventually do take the distribution.

The financial institution holding your account will often calculate the amount and send a reminder, but they are not responsible for making sure you actually withdraw it. That part is on you.

👉 Are you required to take RMDs? Find out here

Business and Gigs

🛒 The 2026 equipment write-off glow-up

For years, the IRS required business owners to spread equipment deductions over decades. Bought a $50,000 machine? Great. Here’s a small deduction every year until 2041. Thanks, enjoy your slow-motion tax break.

The One Big Beautiful Bill Act (OBBBA) changed that in the most dramatic way possible.

Thanks to the OBBBA, 100% bonus depreciation has been back — permanently — since Jan. 19, 2025. Translation: the full-expensing party that started last year is still going strong in 2026, with no expiration date in sight.

On top of that, Section 179 (the other big equipment deduction), had its cap doubled from $1.25 million to $2.5 million, with the phase-out threshold jumping to $4 million. In plain English: more businesses qualify, and for bigger amounts.

What counts? Most of the good stuff: machinery, computers, off-the-shelf software, heavy vehicles over 6,000 lbs, and even used equipment (as long as it’s new to you).

The catch is the Jan. 19, 2025 cutoff date. Assets acquired and placed in service after that date get the full 100% treatment. Assets under a contract signed before that date are stuck with the old, stingier rules.

One wrinkle: that January 19 cutoff is specifically for bonus depreciation. The bigger Section 179 numbers apply to anything placed in service after Dec. 31, 2024 — a few weeks earlier. Most 2025 purchases clear both bars, but don’t assume the dates are interchangeable.

You’ll need Form 4562 to claim Section 179 (it doesn’t happen automatically), and you’ll want to keep meticulous records of purchase contracts and placed-in-service dates, because the IRS does not accept “I’m pretty sure it was after January 19” as documentation.

Also worth noting: many states don’t follow federal depreciation rules. You might shrink your federal tax bill while your state bill stays frustratingly intact. Ask your accountant before you start mentally redecorating your office.

And because it’s permanent, this isn’t a one-year window. 2026 purchases get the same treatment 2025 ones did. Go buy the truck.

👉 Does your equipment qualify?

Celeb Tax Cases

🎤 Lil Wayne owed the IRS $12 million. It took a plea deal to sort it out.

Dwayne Michael Carter Jr. — better known as Lil Wayne — has sold over 120 million records worldwide, won five Grammy Awards, and built a career that spans three decades. He has also spent a significant portion of that career owing the IRS money he earned but apparently forgot to share with the federal government.

The IRS came after Wayne in 2008 for about $1 million. He paid it. Then, in 2010 and 2011, they came back: $1.1 million for 2004 through 2007, plus a fresh $5.6 million for 2008 and 2009. He paid those too, eventually.

Then 2014 happened. Two more liens, for 2011 and 2012, added up to just over $12 million on their own.

Wayne’s situation is a textbook example of what tax professionals call a “snowball” problem. Miss one year, and it gets harder and harder to get caught up. Miss it again a few years later, and you’re not looking at one bill anymore, you’re looking at four.

For high earners with variable income — which describes every touring musician, actor, and athlete — the quarterly estimated tax system is the make-or-break mechanism. You don’t get a W-2 with withholding. You’re responsible for calculating and paying taxes four times a year. Skip that process, and the IRS doesn’t send a polite reminder. It sends a bill with interest, followed by a lien that attaches to everything you own.

Lil Wayne eventually resolved his debts, as most celebrity tax cases do, because the IRS would prefer to collect than to prosecute. But four liens spread across six years, and the interest that piled up on each one, was a deeply expensive form of procrastination.

The IRS doesn’t care how many Grammys you have. It cares whether your 1040-ES arrived on time.

The quick (and slightly prickly) stories we didn’t have time to get to:

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