No Tax On Auto Loans? No More EV Credits? No More CAFE Rules? How O.B.B.B. Will Affect Car Buying and Ownership

12° North Team
Jan 16
4 min read

July 4th, 2025 Trump signs the One Big Beautiful Bill ACT into law

On July 4, President Trump signed into law the “One Big Beautiful Bill” Act, a sweeping budget reconciliation package that quietly rewired large segments of federal spending, taxation, and regulation. It doesn’t start from scratch—reconciliation bills are bound by rules that require everything to tie back to spending and revenue. But this one packs an impressive punch, especially for drivers, off-road enthusiasts, and anyone tangled in the gears of vehicle ownership or energy infrastructure.

The bill’s impact ranges from revised vehicle tax deductions to curtailed clean energy incentives—and even a few regulatory shock-waves for legacy fuel and commuting perks. If you build rigs, sell gear, or just love the smell of turbo spool in the morning, buckle up. Here’s how the terrain is shifting.

(As always, please consult your tax professional before making financial decisions. The below is provided for information purposes only and is not tax or financial advice.)

"No" Tax On Car Loan Interest

The much-touted “no tax” on car loan interest is more illusion than liberation. While buyers may deduct a portion of interest paid on financed vehicle purchases, the path to qualification is paved with caveats. The vehicle must be assembled in the United States, and leases don’t count. Salvage titles, parts cars, and heavy-duty trucks over 14,000 pounds GVWR are all excluded. Even commercial vehicles only qualify if they’re used personally—not for business or fleet operations.

Assuming your purchase checks all the boxes, the deduction tops out at $10,000 annually. High earners—over $150K individually or $250K combined—get phased out completely. And the clock hasn’t started yet: deductions only apply to interest paid beginning January 1, 2026, and fade into the sunset by December 31, 2029.

Rivian SUV making the rounds on the local Texas roads

EV Tax Credits End September 30

Alongside that, the federal EV tax credits—once slated to run through 2032—now expire on September 30, 2025. That covers both the $7,500 new vehicle and $4,000 used vehicle credits. Also ending: tax perks for commercial EVs and home or business charging station installations, some vanishing as early as July 30 of this year. Without these incentives, affordability takes a hit, and the EV market could contract. Expect less variety, fewer low-margin models, and possibly a strategic pullback from automakers.

Less Help With Bad Auto Loans

The Consumer Financial Protection Bureau, once a watchdog for predatory auto lending, also took a body blow. With its budget halved, enforcement and oversight of shady financing practices are expected to plummet, giving unsavory lenders more room to operate.

EPA facilities shown in Ann Arbor Michigan

No Penalties for CAFE Violations

The Corporate Average Fuel Economy (CAFE) program still technically exists, but with this new legislation, it’s lost its teeth. Because of the restrictions around reconciliation bills, Congress couldn’t overhaul emissions or fuel economy laws outright. So instead, they opted for a quieter maneuver: they set the penalties for violating CAFE standards to zero.

That simple change has outsized implications. Automakers are still required to meet fuel economy targets on paper, but there’s no bite behind the bark. The EPA can’t meaningfully enforce the rules when noncompliance carries no financial consequence. It’s like posting speed limits without issuing tickets—some manufacturers might still play by the book, but others now have little reason to stretch for efficiency.

Still, consumers hoping for cheaper prices due to reduced R&D spending may be disappointed. The auto industry works on long lead times, sometimes a decade ahead. The vehicles on sale today were planned years ago, with fuel economy targets baked into their platforms. International regulations aren’t changing, either. If American manufacturers cut corners now, they risk falling behind in global markets where efficiency still matters.

It’s possible that some older engine platforms—ones that might’ve otherwise been phased out—could stick around a little longer thanks to relaxed domestic pressure. But the odds of significant savings reaching showroom floors are slim. And even that brief reprieve may not last. Future administrations or sessions of Congress could reinstate penalties and leave automakers scrambling to catch up.

In effect, the bill creates a temporary vacuum in federal fuel economy enforcement. Whether the industry sees it as a window of opportunity or a legislative shrug remains to be seen. Either way, for consumers and clean air advocates, this chapter reads more like a regulatory pause than a meaningful rewrite.

No More Money for Clean Commercial Vehicles

Commuters aren’t spared either. Previously, workers could deduct up to $175 each month for van-pools, transit passes, and parking expenses. Now, all three benefits share a single $175 monthly cap. And bicycle commuters? Their deduction has been eliminated entirely, meaning pedaling to work now earns you zero tax perks and just a good story for your calves.

Chevron Gas Station off of Rainbow and the West bound 215

Gas and Power Prices Could Be Affected

Gas prices may or may not flinch. The bill reopens domestic and offshore drilling leases, promising to eventually boost oil supply. But new drilling takes years, and oil—being a globally traded commodity—won’t necessarily translate into cheaper prices at the pump. Additionally, the Strategic Petroleum Reserve won’t be sold down as previously planned. Instead, the government will stockpile more oil, holding it for emergencies rather than short-term price drops.

The future of U.S. energy infrastructure also hits turbulence. Several Inflation Reduction Act provisions have been rolled back, including transmission line improvements, offshore wind farm integration, and upgrades to tribal electrical grids. These cuts could stall improvements in reliability, accessibility, and clean energy access—especially in under served regions.

And finally, the clean hydrogen production credit has been sliced early, threatening the fledgling hydrogen industry just as it was finding traction. Without federal incentives, the shift away from oil-derived hydrogen could stall, leaving both private and commercial hydrogen vehicles languishing behind other alt-fuel options.

Final Drive

This legislation doesn’t just adjust policy—it redefines the rule book. Clean energy dreams? Dimmed. Commuter incentives? Consolidated. Auto industry guardrails? Rolled back. If you’re navigating the world of mobility—whether you wrench, brand, sell, or travel—it’s time to re-calibrate your route.