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This week’s update from Trump’s Big Beautiful Bill is a mix of good news and not-so-good news. On one hand, drivers get some long-awaited relief. On the other, the much-debated SALT deduction cap is here to stay—though with a few twists. Let’s dive in.

Tax Deduction on Car Loan Interest (Sec. 70203)

One standout provision: a brand-new deduction for interest paid on personal car loans—even if the vehicle isn’t used for business.

Here’s how it works:

• Applies to vehicles purchased between 2025 and 2028
• Deduction capped at $10,000 of interest per year
• Vehicles must weigh under 14,000 pounds (so, most passenger cars qualify)
• Available even if you don’t itemize (this is an above-the-line deduction)
• Phased out for high earners:
  • Deduction reduced by $200 for every $1,000 of MAGI above $100k (single) or $200k (joint)

This provision is a creative way to offer relief to everyday drivers—helping offset one of the biggest ongoing costs of vehicle ownership.

State & Local Tax (SALT) Deduction Cap Made Permanent (Sec. 70120)

Here’s the less exciting update: the SALT deduction limitation is now permanent.

What’s the new cap?

Starting in 2025, the maximum deduction for state and local taxes is set at:

• $40,000 (Single / Married Filing Jointly)
• $20,000 (Married Filing Separately)

This amount will adjust slightly each year through 2029. But here’s the catch:

The Phaseout Rule

If your MAGI (modified adjusted gross income) is above:

• $500,000 (Single / MFJ), or
• $250,000 (MFS),

…your SALT deduction starts shrinking—by 30% of the amount over the threshold.

And no matter what, the deduction can’t fall below $10,000.

After 2029

The cap resets back to a flat $10,000.

Quick Example:

Let’s say your MAGI is $520,000.

• That’s $20,000 over the $500,000 threshold.
• 30% of that = $6,000.
• So, your SALT deduction cap drops from $40,000 to $34,000.

Still much better than the old $10,000 flat cap—but worth planning around if you’re in a high-tax state.

What This Means for You

The Big Beautiful Bill continues to shape tax planning in unexpected ways. On the upside, drivers with car loans can finally claim relief, even if they take the standard deduction. On the downside, the SALT cap—while higher than before—remains a limiting factor for high-income taxpayers.

Bottom line: middle-income earners may see real benefits, while high-income households still face some trade-offs.

Looking Ahead

Next week, we’ll shift gears to solo entrepreneurs and business owners—including the proposed expansion of the Qualified Business Income (QBI) deduction and the introduction of a brand-new Trump Account.

With the Big Beautiful Bill now in effect, the tax landscape is shifting quickly. From SALT caps to car loan deductions, these changes highlight why proactive planning matters more than ever.

At CPA on Fire, we’re here to help you navigate the fine print, find opportunities, and make sure you’re getting every dollar of relief the law allows.

Schedule a call today to talk strategy for 2025 and beyond.