Auto dealers are facing a significant tax‑policy makeover following enactment of the One Big Beautiful Bill (OBBB) on July 4, 2025. While core provisions of the Tax Cuts and Jobs Act remain intact, new rules around vehicle financing, depreciation write‑offs, and electric‑vehicle incentives reshape the sales pitch for dealerships nationwide. Here’s an expanded overview of what dealerships need to know—and how to turn these tax changes into new opportunities.
Contents
- Car-Loan Interest Deduction
- Business Depreciation Rules
- Expiring EV Credits
- Regulatory Shifts
- Sales & Operations Strategy
New Above‑the‑Line Car‑Loan Interest Deduction
Starting January 1, 2025, individual buyers may deduct up to $10,000 of interest on new‑vehicle loans directly “above the line,” reducing adjusted gross income even if they claim the standard deduction. To qualify, the car, SUV, or truck must be a new vehicle, must have final assembly occur in the United States, have a gross vehicle weight rating under 14,000 pounds, and be purchased outright (leasing doesn’t count).
Income phase‑outs kick in at modified adjusted gross income (MAGI) above $100,000 for single filers and $200,000 for joint filers, phasing out fully at $150,000/$250,000.
Dealer Takeaway: Use simple amortization examples in CRM and pre‑approval letters to demonstrate tax savings on customer loan payments.
Enhanced Depreciation for Commercial Buyers
The OBBB makes permanent 100 percent bonus depreciation for qualifying business assets acquired after January 20, 2025, and raises the Section 179 expensing limit to $2.5 million (phasing out at $4 million). Heavy SUVs, pickups, and vans with GVWR over 6,000 pounds remain eligible if used predominantly for business purposes. A small‑business owner can now deduct the entire purchase price of a work truck in the first year, rather than depreciating over five years. With a $2.5 million cap, multiple vehicles or equipment purchases can be bundled into a single tax‑year transaction.
Dealer Takeaway: Tag qualifying business vehicles and train staff on first‑year write‑offs versus five‑year depreciation.
Sunsetting Federal EV Credits
The federal new‑EV tax credit of up to $7,500 for new electric vehicles—and $4,000 for used EVs—will expire on September 30, 2025. The credits for both commercial and residential EV charging installations end June 30, 2026. Dealerships should prioritize stock of credit‑eligible EV models assembled domestically and priced under income thresholds. Craft “Last Chance for Federal Savings” promotions running August through September, underscoring model eligibility and credit expiration dates. As federal credits sunset, state and utility rebates (such as point‑of‑sale discounts or HOV‑lane stickers) become primary levers. Equip staff with an updated matrix of regional incentives to guide buyers through total‑cost‑of‑ownership comparisons.
Dealer Takeaway: Highlight expiring federal EV credits in marketing, tag eligible models online, and send targeted emails on deadline and local incentives.
Regulatory and Market Dynamics
Although OBBB removes penalties for missing Corporate Average Fuel Economy (CAFE) targets—potentially slowing mandated fuel‑efficiency gains—state‑level emissions standards and zero‑emission vehicle mandates continue to drive OEM product road maps. Dealers should monitor state policies in major markets (e.g., California’s Advanced Clean Cars II) for evolving compliance requirements. Educate buyers on fuel‑economy trade‑offs, especially where lower CAFE pressure could slow efficiency improvements in gas‑powered models. Upsell services such as extended warranties or maintenance packages that address shifting reliability concerns in new powertrain technologies.
Dealer Takeaway: Stay current on policy changes, provide quick‑reference MPG vs. EV range cards, and bundle maintenance plans to reassure buyers on new technology reliability.
Operational and Sales Strategy
To capitalize on OBBB provisions, dealerships will want to analyze and flag inventory so that finance and sales teams instantly recognize vehicles eligible for interest deductions, bonus depreciation, or tax credits. Arm your digital marketing with dynamic taglines highlighting the potential benefits available and retarget site visitors who have browsed qualifying vehicles. Train every touchpoint—from showroom greeters to F&I managers, ensure consistent messaging about deadlines, eligibility criteria, and savings examples. Role‑playing sessions can help staff explain complex rules in plain language.
Dealer Takeaway: Integrate OBBB‑eligibility flags in inventory, use dynamic taglines and retargeting, and hold regular huddles to refresh staff talking points.
The Road Ahead
The One Big Beautiful Bill reshapes core incentives that link vehicle purchases to federal tax policy. Dealers who proactively weave new interest deductions, business depreciation perks, and the impending sunset of EV credits into their sales narratives will build stronger value propositions, deepen customer trust, and seize a competitive edge. By updating inventory systems, refining marketing campaigns, and arming teams with clear, accessible savings examples, dealerships can turn policy complexity into showroom opportunity—and accelerate sales momentum well into 2026 and beyond.
Matthew Marcoullier is a director at ARB. He focuses primarily on financial accounting and consulting services for auto dealerships, commercial businesses, and closely-held businesses. Matt previously served as a Senior Auditor for the State of Maine Department of Audit.
