Latest news with #autoloan
Yahoo
3 days ago
- Business
- Yahoo
A Missourian Asks For The Best Way To Tackle Three Debts: 'I Make $26,000 A Year After Taxes'
A Missourian earns $26,000 per year after taxes and needs help with navigating three debts. The first debt is a personal loan that has a $1,760 balance. The second debt is one to an internet provider that is around $300. However, this charge is incorrect, and the Missourian has deferred it to another debt collector. The final debt is a $10,000 auto loan with a three-year plan. The Missourian admits to making mistakes in the past and turned to Reddit for advice on managing the loans. These were some of the suggestions Redditors offered. Don't Miss: $100k+ in investable assets? – no cost, no obligation. Named a TIME Best Invention and Backed by 5,000+ Users, Kara's Air-to-Water Pod Cuts Plastic and Costs — Work On Your Income Although it is important to pay off debt and create a plan, you can only get so far with a low income. Penny pinching eventually reaches its limits, and that's why multiple Redditors suggested that the Missourian boost their income. A side hustle or part-time job can go a long way in helping the Missourian out of debt. The extra work will eat up more time on their schedule, but having more control over long-term finances is worth the short-term sacrifice. The Missourian may also pursue a higher-paying career after exploring new income streams. Staying at the same job with the same pay isn't a winning strategy in the long run. Looking for ways to increase income is the best long-term solution for the Missourian. Trending: This AI-Powered Trading Platform Has 5,000+ Users, 27 Pending Patents, and a $43.97M Valuation — Start With The Smallest Debt Some Redditors suggested the debt snowball strategy to pay off debt. After paying off the internet provider, the Missourian can prioritize the personal loan and wrap up by paying the auto loan. Knocking out the $300 debt will give the Missourian a small win that can compound into something greater. Paying off this debt also frees the Missourian from the debt collector's phone calls. The Missourian still has to make minimum monthly payments on the personal loan and the auto loan. However, tackling smaller balances can help the Missourian feel like they are getting on the right track. Given that the Missourian admitted to making financial mistakes, the debt snowball method seems more appropriate than the debt avalanche Making Bad Financial Decisions It's good that the Missourian acknowledged past mistakes. Some people refuse to admit or address the mistakes that got them into debt. It can also result in a financial recovery. Paying off debt and saving money can put the individual on a better path toward long-term financial goals. Unfortunately, some people rebound financially only to fall back into bad habits. Some people pay off credit card debt only to blow through the money all over again. Other people make matters worse. These types of people may take out home equity loans to consolidate credit card debt and then proceed to get deeper into credit card debt. It's important to acknowledge and correct the bad financial habits that put you in an unfavorable position. That way, when you apply good financial habits and recover, you can preserve your success instead of falling back into bad habits. Read Next: Can you guess how many retire with a $5,000,000 nest egg? . Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article A Missourian Asks For The Best Way To Tackle Three Debts: 'I Make $26,000 A Year After Taxes' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
Yahoo
5 days ago
- Automotive
- Yahoo
How the "big, beautiful bill" helps car buyers save money on taxes
Millions of car buyers in the U.S. could soon get some tax relief thanks to a provision in the so-called "big, beautiful bill" that was signed into law on July 4 by President Trump. The idea of giving a tax break for auto purchasers was first floated by Mr. Trump while on the campaign trail in October, when he promised that such a measure would "make car ownership dramatically more affordable for millions and millions of working American families." That promise has now materialized as part of the One Big Beautiful Bill Act, with the new tax break taking effect for car purchases starting in 2025. But the deduction also has income limitations that narrow the number of Americans who can claim it, while used car buyers and vehicle leasers do not benefit. Still, car buyers who have bought a new vehicle this year or are planning to do so in the next four years may get some tax relief when they file their 2025 tax returns. The deduction will expire in 2028, which means car buyers can only take advantage of the benefit for four tax years. At the same time, the One Big Beautiful Act eliminates the federal tax credit for electric vehicles after Sept. 30. The tax break, which provides a $7,500 for new EVs and a $4,000 credit for used EVs, is credited with helping make electric vehicles more affordable for many buyers. Here's what to know. How much is the new auto loan deduction? The new tax cuts and spending law enables car buyers to deduct up to $10,000 in "qualified passenger vehicle loan interest during a given taxable year," beginning with 2025 purchases. While that's similar to the mortgage interest deduction available to homeowners, there is one major difference: Car buyers will be able to itemize their auto loan interest even if they take the standard deduction. By comparison, the mortgage interest deduction is only available to taxpayers who itemize. Which vehicles qualify for the deduction? The tax break applies to the purchase of new cars, motorcycles, sport utility vehicles, minivans, vans and pickup trucks weighing less than 14,000 pounds (referred to as light vehicles). Used cars don't qualify. To qualify for the deduction, a vehicle also must be assembled in the U.S., which further limits the tax break. The deduction also only applies to vehicles purchased for personal use, not for fleets or commercial purposes. And it excludes autos that are leased, which represent about one-quarter of all auto sales in the U.S., according to Experian. What are the income limits for the auto loan deduction? The full break can only be claimed by single taxpayers with a modified adjusted gross income (MAGI) of $100,000 or less or married couples with a MAGI of $200,000 or less. Modified adjusted gross income is your adjusted gross income, which can be found on line 11 of your 1040 tax return, with some items like savings bond interest added back in, according to the IRS. Under the new law, the auto loan deduction shrinks for people with MAGIs above those thresholds, with the amount reduced by $200 for each $1,000 in income above those levels. The deduction is completely phased out for single filers earning above $150,000 and married couples with incomes above $250,000. How many Americans will qualify for the car loan deduction? An estimated 3.5 million new vehicle loans could be eligible for the tax break this year if purchasing patterns stay the same and after excluding commercial vehicles and customers above the income cutoff, said Jonathan Smoke, chief economist at Cox Automotive. About 60% of the 15.9 million new light vehicles sold last year were financed with auto loans, according to Cox data. How much will the car loan deduction save on my taxes? That depends on the size of your auto loan and whether you fall below the income thresholds for the new tax break, but the typical car buyer could save hundreds per year on their taxes. The average new vehicle loan is about $44,000 financed over six years. Interest rates vary by customer, so the savings will, too. In general, the tax deduction will decline after the initial year because interest payments on loans are front-loaded, while principal payments grow on the back end. Car buyers who qualify for an auto loan rate of about 6.5%, typically available to consumers with high credit scores, could deduct $3,000 in the first year of owning their car and about $1,800 per year after that for the remainder of the loan, according to the American Financial Services Association, a consumer credit industry trade group. Deductions reduce a filer's taxable income, which helps lower their tax burden. For instance, someone in the 22% tax bracket could save $660 on their taxes by claiming a $3,000 auto loan deduction. At a 9.3% interest rate — typical of people with subprime credit scores — an average new vehicle buyer could save about $2,200 on taxes over four years, Smoke said. Sen. Lindsey Graham says "a turning point, regarding Russia's invasion of Ukraine, is coming" Trump pushes senators to make $9.4 trillion in spending cuts Student's unique talent that's for the birds Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CBS News
5 days ago
- Automotive
- CBS News
Some car buyers will get a tax break this year from the "big, beautiful bill." Here's how it works.
Millions of car buyers in the U.S. could soon get some tax relief thanks to a provision in the so-called " big, beautiful bill" that was signed into law on July 4 by President Trump. The idea of giving a tax break for auto purchasers was first floated by Mr. Trump while on the campaign trail in October, when he promised that such a measure would "make car ownership dramatically more affordable for millions and millions of working American families." That promise has now materialized as part of the One Big Beautiful Bill Act, with the new tax break taking effect for car purchases starting in 2025. But the deduction also has income limitations that narrow the number of Americans who can claim it, while used car buyers and vehicle leasers do not benefit. Still, car buyers who have bought a new vehicle this year or are planning to do so in the next four years may get some tax relief when they file their 2025 tax returns. The deduction will expire in 2028, which means car buyers can only take advantage of the benefit for four tax years. At the same time, the One Big Beautiful Act eliminates the federal tax credit for electric vehicles after Sept. 30. The tax break, which provides a $7,500 for new EVs and a $4,000 credit for used EVs, is credited with helping make electric vehicles more affordable for many buyers. Here's what to know. How much is the new auto loan deduction? The new tax cuts and spending law enables car buyers to deduct up to $10,000 in "qualified passenger vehicle loan interest during a given taxable year," beginning with 2025 purchases. While that's similar to the mortgage interest deduction available to homeowners, there is one major difference: Car buyers will be able to itemize their auto loan interest even if they take the standard deduction. By comparison, the mortgage interest deduction is only available to taxpayers who itemize. Which vehicles qualify for the deduction? The tax break applies to the purchase of new cars, motorcycles, sport utility vehicles, minivans, vans and pickup trucks weighing less than 14,000 pounds (referred to as light vehicles). Used cars don't qualify. To qualify for the deduction, a vehicle also must be assembled in the U.S., which further limits the tax break. The deduction also only applies to vehicles purchased for personal use, not for fleets or commercial purposes. And it excludes autos that are leased, which represent about one-quarter of all auto sales in the U.S., according to Experian. What are the income limits for the auto loan deduction? The full break can only be claimed by single taxpayers with a modified adjusted gross income (MAGI) of $100,000 or less or married couples with a MAGI of $200,000 or less. Modified adjusted gross income is your adjusted gross income, which can be found on line 11 of your 1040 tax return, with some items like savings bond interest added back in, according to the IRS. Under the new law, the auto loan deduction shrinks for people with MAGIs above those thresholds, with the amount reduced by $200 for each $1,000 in income above those levels. The deduction is completely phased out for single filers earning above $150,000 and married couples with incomes above $250,000. How many Americans will qualify for the car loan deduction? An estimated 3.5 million new vehicle loans could be eligible for the tax break this year if purchasing patterns stay the same and after excluding commercial vehicles and customers above the income cutoff, said Jonathan Smoke, chief economist at Cox Automotive. About 60% of the 15.9 million new light vehicles sold last year were financed with auto loans, according to Cox data. How much will the car loan deduction save on my taxes? That depends on the size of your auto loan and whether you fall below the income thresholds for the new tax break, but the typical car buyer could save hundreds per year on their taxes. The average new vehicle loan is about $44,000 financed over six years. Interest rates vary by customer, so the savings will, too. In general, the tax deduction will decline after the initial year because interest payments on loans are front-loaded, while principal payments grow on the back end. Car buyers who qualify for an auto loan rate of about 6.5%, typically available to consumers with high credit scores, could deduct $3,000 in the first year of owning their car and about $1,800 per year after that for the remainder of the loan, according to the American Financial Services Association, a consumer credit industry trade group. Deductions reduce a filer's taxable income, which helps lower their tax burden. For instance, someone in the 22% tax bracket could save $660 on their taxes by claiming a $3,000 auto loan deduction. At a 9.3% interest rate — typical of people with subprime credit scores — an average new vehicle buyer could save about $2,200 on taxes over four years, Smoke said.
Fast Company
5 days ago
- Automotive
- Fast Company
Will the new tax break for car loans boost sales? What to know
Millions of people receive a federal tax deduction for the interest they pay on home loans. Under President Donald Trump's new tax-cut law, many people for the first time also could claim a tax deduction for interest on their vehicle loans. The new tax break will be available even to people who don't itemize deductions. But there are some caveats that could limit its reach. The vehicles must be new, not used. They must be assembled in the U.S. And the loans must be issued no sooner than this year, to list just a few qualifications. Here are some things to know about the new auto loan interest tax deduction: Candidate Trump promised an auto loan interest tax break Trump pledged while campaigning last year to make interest on car loans tax-deductible. He said it would make car ownership more affordable and 'stimulate massive domestic auto production.' The idea made it into the big tax-cut bill passed by Congress, which Trump signed into law July 4. The law allows taxpayers to deduct up to $10,000 of interest payments annually on loans for new American-made vehicles from 2025 through 2028. It applies to cars, motorcycles, sport utility vehicles, minivans, vans and pickup trucks weighing less than 14,000 pounds, a threshold referred to as light vehicles. But it only applies to vehicles purchased for personal use, not for fleets or commercial purposes. The tax break can be claimed starting on 2025 income tax returns. But the deduction phases out for individuals with incomes between $100,000 and $150,000 or joint taxpayers with incomes between $200,000 and $250,000. Those earning more cannot claim the tax break. Millions of buyers could benefit, but millions of others will not U.S. automobile dealers sold 15.9 million new light vehicles last year, a little over half of which were assembled in the U.S, according to Cox Automotive. It says around 60% of retail sales are financed with loans. After excluding fleet and commercial vehicles and customers above the income cutoff, an estimated 3.5 million new vehicle loans could be eligible for the tax break this year, if purchasing patterns stay the same, said Jonathan Smoke, chief economist at Cox Automotive. It's the assembly plant, not the automaker's headquarters that matters The tax break applies to vehicles assembled in the U.S., no matter where the company making them is headquartered. All Tesla vehicles sold in the U.S. are assembled in this country. But so are all Acura brands, the luxury model of Japanese automaker Honda. Last year, 78% of Ford vehicles sold in the U.S. were assembled in this country, according to Cox Automotive. But customers wanting the tax break will need to pay attention to specific models. While the Ford Mustang is assembled in Michigan, the Mustang Mach-E is built in Mexico. General Motors assembles all of its Cadillacs in the U.S. But just 44% of its Chevrolets sold last year were assembled in the U.S., and just 14% of Buicks, according to Cox Automotive. That's a lower U.S-assembled rate than Honda (60%), Toyota (52%) and Nissan (48%), which all are headquartered in Japan. Taxpayers could save hundreds of dollars a year The average new vehicle loan is about $44,000 financed over six years. Interest rates vary by customer, so the savings will, too. In general, the tax deduction will decline after the initial year, because interest payments on loans are frontloaded while principal payments grow on the back end. At a 9.3% interest rate, an average new vehicle buyer could save about $2,200 on taxes over four years, Smoke said. The tax savings would be less on a loan at 6.5%, which is the rate figured into calculations by the American Financial Services Association, a consumer credit industry trade group. Some people also could see a reduction in state income taxes Whereas the tax deduction for home loan interest can be claimed only by people itemizing on their tax returns, Congress wrote the deduction for auto loan interest so that it can apply to all taxpayers, including those claiming the standard deduction. On a tax form, the auto loan deduction will come before the calculation of a taxpayer's adjusted gross income. That's an important distinction, because many states use a taxpayer's federal adjusted gross income as the starting point for figuring their state income taxes. If that income figure is lower, it could reduce the state taxes owed. The verdict is out on whether the tax break will boost sales At Bowen Scarff Ford in Kent, Washington, customers started asking about the auto loan tax deduction before Congress had even taken a final vote on the tax-cut bill, said General Manager Paul Ray. So he decided to promote it on the dealer's website. A website ribbon exclaims: 'CAR LOAN TAX DEDUCTION NOW AVAILABLE' while also promoting an electric vehicle tax credit that is ending soon as a result of Trump's tax-cut law. 'I think it's going to help incentivize vehicle purchases through this year,' Ray said. Celia Winslow, president and CEO of the American Financial Services Association, concurred: 'For some people deciding — should I buy it, should I not — this could be something that tips the scale.' Others remain skeptical. According to Smoke's math, the average annual tax savings is smaller than a single month's loan payment for a new vehicle. 'I don't think it moves the needle on somebody on the fence of buying a new vehicle or not,' Smoke said. 'But I think it could influence their decision to finance that vehicle instead of paying cash or instead of leasing a vehicle.'
Al Arabiya
7 days ago
- Automotive
- Al Arabiya
New tax break for auto loans could save some buyers thousands of dollars. But will it boost sales?
Millions of people receive a federal tax deduction for the interest they pay on home loans. Under President Donald Trump's new tax-cut law, many people for the first time also could claim a tax deduction for interest on their vehicle loans. The new tax break will be available even to people who don't itemize deductions. But there are some caveats that could limit its reach. The vehicles must be new, not used. They must be assembled in the US. And the loans must be issued no sooner than this year, to list just a few qualifications. Here are some things to know about the new auto loan interest tax deduction: Candidate Trump promised an auto loan interest tax break. Trump pledged while campaigning last year to make interest on car loans tax-deductible. He said it would make car ownership more affordable and stimulate massive domestic auto production. The idea made it into the big tax-cut bill passed by Congress, which Trump signed into law July 4. The law allows taxpayers to deduct up to 10,000 of interest payments annually on loans for new American-made vehicles from 2025 through 2028. It applies to cars, motorcycles, sport utility vehicles, minivans, vans, and pickup trucks weighing less than 14,000 pounds–a threshold referred to as light vehicles. But it only applies to vehicles purchased for personal use, not for fleets or commercial purposes. The tax break can be claimed starting on 2025 income tax returns. But the deduction phases out for individuals with incomes between 100,000 and 150,000 or joint taxpayers with incomes between 200,000 and 250,000. Those earning more cannot claim the tax break. Millions of buyers could benefit, but millions of others will not. US automobile dealers sold 15.9 million new light vehicles last year, a little over half of which were assembled in the US, according to Cox Automotive. It says around 60 percent of retail sales are financed with loans. After excluding fleet and commercial vehicles and customers above the income cutoff, an estimated 3.5 million new vehicle loans could be eligible for the tax break this year if purchasing patterns stay the same, said Jonathan Smoke, chief economist at Cox Automotive. It's the assembly plant, not the automaker's headquarters, that matters. The tax break applies to vehicles assembled in the US, no matter where the company making them is headquartered. All Tesla vehicles sold in the US are assembled in this country. But so are all Acura brands–the luxury model of Japanese automaker Honda. Last year, 78 percent of Ford vehicles sold in the US were assembled in this country, according to Cox Automotive. But customers wanting the tax break will need to pay attention to specific models. While the Ford Mustang is assembled in Michigan, the Mustang Mach-E is built in Mexico. General Motors assembles all of its Cadillacs in the US. But just 44 percent of its Chevrolets sold last year were assembled in the US, and just 14 percent of Buicks, according to Cox Automotive. That's a lower US-assembled rate than Honda (60 percent), Toyota (52 percent), and Nissan (48 percent), which all are headquartered in Japan. Taxpayers could save hundreds of dollars a year. The average new vehicle loan is about 44,000 financed over six years. Interest rates vary by customer, so the savings will too. In general, the tax deduction will decline after the initial year because interest payments on loans are frontloaded while principal payments grow on the back end. At a 9.3 percent interest rate, an average new vehicle buyer could save about 2,200 on taxes over four years, Smoke said. The tax savings would be less on a loan at 6.5 percent, which is the rate figured into calculations by the American Financial Services Association, a consumer credit industry trade group. Some people also could see a reduction in state income taxes. Whereas the tax deduction for home loan interest can be claimed only by people itemizing on their tax returns, Congress wrote the deduction for auto loan interest so that it can apply to all taxpayers, including those claiming the standard deduction. On a tax form, the auto loan deduction will come before the calculation of a taxpayer's adjusted gross income. That's an important distinction because many states use a taxpayer's federal adjusted gross income as the starting point for figuring their state income taxes. If that income figure is lower, it could reduce the state taxes owed. The verdict is out on whether the tax break will boost sales. At Bowen Scarff Ford in Kent, Washington, customers started asking about the auto loan tax deduction before Congress had even taken a final vote on the tax-cut bill, said General Manager Paul Ray. So he decided to promote it on the dealer's website. A website ribbon exclaims: 'CAR LOAN TAX DEDUCTION NOW AVAILABLE,' while also promoting an electric vehicle tax credit that is ending soon as a result of Trump's tax-cut law. 'I think it's going to help incentivize vehicle purchases through this year,' Ray said. Celia Winslow, president and CEO of the American Financial Services Association, concurred: 'For some people deciding–should I buy it, should I not–this could be something that tips the scale.' Others remain skeptical. According to Smoke's math, the average annual tax savings is smaller than a single month's loan payment for a new vehicle. 'I don't think it moves the needle on somebody on the fence of buying a new vehicle or not,' Smoke said. 'But I think it could influence their decision to finance that vehicle instead of paying cash or instead of leasing a vehicle.'
