WASHINGTON — A lawmaker from Ohio introduced legislation Friday to make good on an idea President Donald Trump first suggested on the campaign trail last year. The United States Automobile Consumer Assistance and Relief Act, or USA CAR Act, would let Americans write off the interest on their auto loans for vehicles made in the United States.

What You Need To Know

  • Sen. Bernie Moreno, R-Ohio, introduced the United States Automobile Consumer Assistance and Relief Act, or USA CAR Act, on Friday

  • The bill would let Americans write off the interest on their auto loans for vehicles made in the United States

  • President Donald Trump first proposed the idea while campaigning last year

  • About 50% of the cars sold in the United States are made domestically

“For decades, the American auto sector has been devastated by bad trade deals and bad leaders, who shipped American manufacturing jobs overseas while flooding our market with cheap foreign cars,” Sen. Bernie Moreno, R-Ohio, said in a statement announcing the proposed bill.

“Thanks to President Trump, we are finally ensuring every car sold in America is made in America and working Americans can actually afford to buy a car in the first place,” Moreno said, referencing a 25% import tax on foreign-made cars that took effect last week.

When suggesting the idea of deductible auto loan interest last year, the president said it would be similar to the mortgage interest deduction that allows homeowners to write off some of their mortgage interest payments.

Auto loan debt is the second-largest debt category after home loans. According to the Federal Reserve Bank of New York, as of the end of 2024, Americans owe $1.655 trillion in auto loan debt, which accounts for 9.2% of American consumer debt. About 80% of new cars are financed.

The average auto loan amount for a new car is $41,572 and takes 68 months to pay off, according to Experian. Current auto loan rates for a new car range from 6.4% for prime borrowers with a credit score of at least 661 up to 15.75% for individuals whose credit scores are subprime, or below 500.

A White House fact sheet on automobiles in March said approximately 50% of the 16 million cars sold in the United States last year were made domestically. Under the proposed legislation, vehicles whose final assembly is in the United States would be eligible for the auto loan interest tax deduction.

The bill allows for any interest paid or accrued during the taxable year to be deductible, effective with payments that occurred on or after Jan. 1, 2025.

Moreno’s introduction of the USA CAR Act comes as Congressional leaders are wrestling over a federal budget framework, which the House of Representatives narrowly passed this week. That bill includes potential new tax breaks on tips and Social Security income the president also suggested while campaigning last year.