Trump Tax Cuts Passed: How They Could Affect Car Leasing & Financing in 2025

Introduction: Big Beautiful Bill Explained

Trump's "big beautiful bill" has officially passed, marking one of the most sweeping tax reforms in recent U.S. history. With lower income tax rates, expanded deductions, and fresh incentives designed to reward both individuals and small businesses, this bill is already making waves. But while headlines celebrate the size and scope of the cuts, many Americans are left scratching their heads — what does this really mean for your finances?

This article breaks it all down for you: the practical takeaways, the real savings, and what this could mean if you are leasing or financing a car in 2025. Whether you are a first-time buyer or a returning lessee, now the tax changes could make the smartest time to upgrade your ride.

Let us unpack the essentials and see how this "big beautiful bill" could mean big beautiful savings on your next car.

Lower Tax Rates

One of the biggest wins for taxpayers in the new bill is the permanent reduction in individual income tax rates. This is not just a small tweak — it is the most expensive provision in the entire package, with an estimated $2 trillion in lost government revenue over the next ten years. But for everyday Americans, that translates into more money in your pocket.

Originally introduced under the 2017 Tax Cuts and Jobs Act, these rate reductions were set to expire at the end of 2025. Now, they are here to stay.

Here is what is changing:

• The top 39.6% bracket drops to 37%

• The 25% bracket drops to 22%

• The 15% bracket drops to 12%

This means whether you are a single filer, a family with kids, or a small business owner, your federal tax burden is likely to shrink. That can free up a meaningful chunk of change — money that could go toward a new car lease, a down payment on a financed vehicle, or even upgrading to a higher trim or luxury model.

For buyers and lessees across states like NY, NJ, PA, CT, and CA, this change can shift the conversation from “Can I afford this car?” to “Which car is the best value for me right now?”

In short, lower tax rates = more buying power. And that is exactly the kind of financial environment where savvy car shoppers thrive.

Higher Standard Deductions

One of the most impactful parts of the new tax bill is the permanent increase to the standard deduction, affecting 90% of Americans who don’t itemize.

Introduced in 2017, the deduction was more than doubled to simplify taxes and cut household income taxes. It was set to expire in 2025 — now it’s permanent, locking in long-term savings.

Over the next decade, this shift is projected to save U.S. taxpayers over $1 trillion.

Why it matters: a higher deduction shields more of your income from taxes — leaving you with more take-home pay for things like a car lease or financing deal.

While the bill improves some itemized deductions, most savings come from the standard deduction — making your next car more affordable.

Increased SALT Caps

Another major shift in the new tax legislation is the temporary increase in the cap on State The new tax bill temporarily raises the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 — effective immediately through 2029.

This is a big win for taxpayers in high-tax states like NY, NJ, and CA, where the previous cap limited valuable deductions. Now, itemizing makes sense again, especially for homeowners and high-income earners.

For car shoppers, that means more post-tax dollars to play with — making that premium SUV lease or luxury sedan more accessible.

If you're in a high-tax state, this update could unlock serious savings — and a better car.

New Car Loan Interest Deduction

One of the most exciting perks in the new tax bill? A car loan interest deduction that helps buyers save — big.

You can now deduct up to $10,000 in interest paid on a car loan through 2028. That’s real cash back in your pocket — but only if you buy a new, American-made vehicle. Think: Ford F-150, Chevy Tahoe, Jeep Grand Cherokee, and other U.S.-built models.

This deduction applies even if you take the standard deduction — no need to itemize. (Just note: income caps apply, so higher earners may not qualify)

If you’re in NJ, NY, or PA, and looking to finance a vehicle, this could seriously cut your tax bill and lower the true cost of ownership.

Leasing or buying? This update just made financing a lot more attractive.

Increased Child Tax Credit

Families with children are among the biggest winners in the new tax bill, thanks to a significant boost to the Child Tax Credit. Originally scheduled to drop from $2,000 to $1,000 per child after 2025, the credit is not only preserved — it is enhanced.

Under the new law, qualifying families can now receive $2,200 per child, starting immediately. This change is expected to save American taxpayers nearly $800 billion over the next decade.

The income phase-out thresholds remain the same as before:

• $200,000 for single filers

• $400,000 for married couples filing jointly

If you are a parent considering a lease on a spacious SUV like the Toyota Highlander or looking to finance a reliable sedan like the Honda Accord, this extra tax credit could go a long way toward helping you stretch your budget further. In a post-tax cut landscape, every dollar saved matters — and this boost to the Child Tax Credit is the one that families should not overlook.

Increased Senior Deduction

The new tax bill delivers meaningful relief to older Americans by tripling the senior tax deduction.

Previously, taxpayers over 65 could claim an extra $2,000 — or $3,200 if both spouses qualified. Now, it's $6,000 per person, significantly lowering taxable income and easing financial strain during retirement.

While the bill didn't exclude Social Security income from taxation — a long-standing hope for many — this boosted deduction helps offset that decision.

As with other provisions, income caps apply. But for most retirees, it means a smaller tax bill and more flexibility for important expenses — like financing a safer, more comfortable vehicle for daily driving or travel.

Whether it's a dependable crossover or a new American-made sedan, car ownership just got more accessible for seniors.

No Tax on Overtime

While the new tax bill does not completely eliminate taxes on overtime pay, it introduces a generous overtime wage deduction that effectively lowers the tax burden for millions of working Americans putting in extra hours.

Under this provision, eligible taxpayers can deduct a portion of their overtime earnings from their taxable income:

• Single filers can deduct up to $12,500

• Married couples filing jointly can deduct up to $25,000

This deduction phases out for higher earners, beginning at $150,000 for single taxpayers and $300,000 for married couples. But for most middle-income households, especially those working overtime to keep up with rising living costs, this change could provide a noticeable tax break.

More take-home pay means more financial flexibility — whether that is building savings, paying down debt, or finally upgrading your vehicle. If you have been logging extra hours at work, this new deduction could help you put that overtime to good use with a lower-cost lease or a more favourable financing plan.

No Tax on Tips

A big win for service industry pros: the new tax bill introduces a Tip Income Deduction.

Eligible workers can now deduct up to $25,000 in qualified tips from taxable income. The benefit starts phasing out at $150K (single) and $300K (joint filers).

To qualify, tips must come from roles where tipping is customary:

• Hospitality (servers, bartenders, hotel staff)

• Personal care (stylists, massage therapists)

• Transportation (rideshare, valets)

• Creative/retail services (tattoo artists, beauty consultants)

This doesn’t apply to high-earning professional fields like law or medicine.

For millions, this means fairer taxes, more take-home pay, and possibly finally leasing that SUV or upgrading to a safer, newer car — without blowing the budget.

Enhanced QBI Deduction

Small business owners, freelancers, and side hustlers are set to benefit in a big way from the enhanced Qualified Business Income (QBI) Deduction included in the new tax bill. Originally part of the 2017 tax reforms and set to expire in 2025, the popular 20% deduction has now been made permanent.

This means eligible business owners can continue deducting 20% of their qualified business income, slashing their taxable income by tens of thousands of dollars each year. For example, if you earn $150,000 in qualifying income, you could see a $30,000 deduction — a significant tax break.

The deduction applies broadly across various business structures, including:

• S-Corps

• Partnerships

• Single-member LLCs

• Unincorporated businesses and side gigs

In addition to making the deduction permanent, the bill raises the income thresholds by $25,000 to $50,000 depending on filing status — opening the door for some higher-income earners who were previously phased out.

Whether you are a full-time entrepreneur or running a profitable side gig, this deduction can lead to major tax savings — giving you more freedom to reinvest in your business, boost your savings, or even finance a new company vehicle. With fewer dollars going to the IRS, you have more power to drive your business — and your lifestyle — forward.

100% Bonus Depreciation

The new tax bill permanently extends the 100% bonus depreciation provision, a powerful tool for business owners and investors looking to reduce their taxable income through strategic asset purchases.

Previously scheduled to drop to 40% in 2025, this deduction now remains at 100% for all qualifying purchases made after January 19, 2025. That means businesses can immediately write off the full cost of eligible assets in the year they are placed in service — accelerating tax savings and improving cash flow.

Eligible property includes a wide range of tangible business and investment assets, such as:

• Vehicles

• Machinery

• Equipment

• Furniture and fixtures

• Tools

• Even aircraft and yachts

This enhancement encourages businesses to invest in new assets, helping them grow operations and increase income, while significantly lowering their tax liability. For business owners who rely on vehicles — whether for deliveries, client visits, or employee transport — this provision offers an opportunity to acquire or upgrade their fleet while maximizing tax benefits.

100% R&D Expensing

The new tax bill also permanently extends the 100% Research and Development (R&D) expensing benefit, providing a major boost to businesses investing in innovation and growth.

This provision allows companies to fully write off qualifying R&D expenses in the year they are incurred, rather than spreading deductions over several years. That means faster tax relief and improved cash flow for businesses focused on developing or improving:

• Products

• Processes

• Techniques

• Formulas

• Software

By enabling a full immediate deduction of R&D costs, the bill encourages innovation across industries — helping businesses stay competitive and bring new ideas to market more quickly.

For startups, tech companies, and manufacturers alike, this extension means more resources can be directed toward creating cutting-edge products and solutions, while simultaneously reducing their tax burden.

Extended Opportunity Zone Credit

The new tax bill permanently renews and enhances the Opportunity Zone tax credit, a powerful incentive designed to spur investment in economically distressed communities across the country.

This credit allows investors to defer — and potentially avoid — capital gains taxes by reinvesting those gains into qualified Opportunity Zone funds. By channelling capital into these designated areas, investors not only support community development but also unlock significant tax advantages.

To qualify, investments must be made in certified Opportunity Zone funds, which then deploy capital into local businesses, real estate projects, and infrastructure improvements within the zones.

For investors looking to grow their wealth while supporting revitalization efforts, this extension offers a unique way to maximize returns and reduce tax liability — making it a win-win for both investors and communities alike.