US Transportation Secretary Sean Duffy misstated a key provision of President Donald Trump’s tax law on Friday, describing a loan interest deduction as a direct tax credit.
Duffy told CNBC that Americans purchasing US-made vehicles receive “a $10,000 tax credit when they file their taxes” under the One Big Beautiful Bill Act signed into law on July 4, 2025.
“Don’t forget in one big beautiful bill, our Americans who buy a brand-new car that was made in America get a $10,000 tax credit when they file their taxes,” Duffy said while speaking at a Ford manufacturing plant.
“So again, an idea that’s going to bring down the price of a car before was a $7,500 tax credit if you bought an EV,” the US Transportation Secretary said, referring to the EV tax credit that expired on September 30.
“This is by any American-made car, and President Trump and Republicans in Congress have put in a tax process that can give you a break, making those new cars more affordable,” Duffy stated.
Deduction, Not Credit
The law does not provide a $10,000 tax credit.
It offers a tax deduction of up to $10,000 on auto loan interest for new vehicles assembled in the United States purchased between 2025 and 2028.
The distinction carries significant financial implications for consumers.
A tax credit reduces a filer’s tax bill dollar-for-dollar, meaning a $10,000 credit would deliver $10,000 in savings.
A tax deduction reduces taxable income, with actual savings depending on the taxpayer’s bracket. For a buyer in the 22% tax bracket, a $10,000 deduction would yield approximately $2,200 in tax savings.
According to Cox Automotive chief economist Jonathan Smoke, the average car owner pays roughly $3,000 in annual loan interest, translating to $400 to $600 in annual tax savings for most buyers.
Claiming the full $10,000 deduction would require a loan exceeding $110,000.
The deduction phases out for single taxpayers earning more than $100,000 and joint filers earning above $200,000.
Unlike the previous $7,500 EV tax credit that the 20th United States Secretary of Transportation referenced, which functioned as an actual dollar-for-dollar credit, the new provision operates solely as a deduction.
The EV tax credit was eliminated for vehicles purchased after September 30, 2025, under the same legislation.
When sharing his CNBC clip on X, secretary wrote: “We want investments in America, not China. The Trump Administration wants you to buy brand new cars made here which is why we are giving a TEN THOUSAND DOLLAR tax credit to you if you buy a car made in the USA.”
China Concerns
Duffy also addressed China’s automotive industry during the appearance, linking the tax provision to broader trade policy.
“When you have Chinese car companies that are backed by the Chinese government, and we believe in free enterprise in America, it does make it more challenging,” Duffy said.
“But I think the message of President Trump has been we want to bring all investments back to America to have more manufacturing, more jobs in this country, and I think that is his point.”
When asked about the trade agreement signed hours earlier between Canadian Prime Minister Mark Carney and China allowing imports of up to 49,000 Chinese EVs with a sharply lower tariff, Duffy said Canada would regret the decision and that those vehicles would not be permitted to enter the United States.
Duffy and Musk
The transportation secretary has faced pushback late last year over his acting role as the NASA administrator — before Jared Isaacman’s appointment in December.
Last October, Duffy said Elon Musk’s SpaceX was falling “behind” the US timeline to return to the moon with Artemis and that he would open the contract to other companies.
SpaceX is among the contractors participating in NASA’s Artemis mission, which aims to establish the first long-term presence on the Moon and prepare for missions to Mars.
Musk responded on X a few days later saying “Duffy understands nothing about how anything works.”
“The importance of the Moon for scaling AI did not occur to me until we did the scaling math on Earth to figure out what it would take to launch >1TW/year of orbital AI,” Musk added.
