The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, bringing significant tax changes and potential benefits for car dealerships. In the following, we highlight the provisions most likely to affect dealerships and their related entities.

Business Interest Expense Limitation: A Favorable Adjustment

Since 2022, many companies have faced tighter limitations on business interest deductions after the depreciation and amortization addback was removed from the earnings calculation. The OBBBA reverses this change.

For tax years beginning after Dec. 31, 2024, the calculation reverts to 30% of EBITDA (earnings before interest, taxes, depreciation and amortization). This adjustment could also free up previously disallowed interest expense, potentially lowering taxable income compared to book income.

Bonus Depreciation: 100% Expensing Restored

Prior to the OBBBA, bonus depreciation was scheduled to phase down and end completely after Dec. 31, 2026. The OBBBA permanently restores 100% bonus depreciation for qualified property acquired and placed in service after Jan. 19, 2025.

Dealers that stand to benefit most are those undertaking major facility construction or renovation projects, and those whose ownership structure includes trusts or passive owners who cannot take full advantage of Section 179 deductions on their personal returns.

EV Credits and Charging Infrastructure: Major Shifts

As of Sept. 30, 2025, the OBBBA repeals credits for new and used electric vehicles, including the commercial clean vehicle credit that many dealers leveraged in 2023 and 2024.

For charging infrastructure, the alternative fuel vehicle refueling property credit remains — but with a shorter window. The installation deadline for eligibility is now June 30, 2026 (moved up from Dec. 31, 2032). Dealers should revisit their EV charging plans in light of these changes and anticipated shifts in EV sales.

New Car Interest Deduction: A Tool for Consumers

While dealerships themselves will not claim the new car interest deduction, it may influence consumer behavior. Educating sales and F&I teams on the details will be key to leveraging this incentive.

Key provisions include:

• Phases out for taxpayers with MAGI above $100,000 (single) or $200,000 (joint).
• Applies to indebtedness incurred after Dec. 31, 2024.
• Vehicle must be for personal use.
• Vehicle must be new (does not apply to pre-owned).
• Final assembly must be in the U.S.
• Vehicle must be under 14,000 pounds.
• Lease financing interest is not eligible.

Overtime Pay Deduction: Employee Impact, Employer Responsibility

The OBBBA introduces a new deduction for employees earning overtime, effective 2025-28. Although dealerships will not directly benefit, they will have reporting obligations and should prepare to answer employee questions.

• Deduction applies to the “half” portion of time-and-a-half overtime pay.
• Maximum deduction: $12,500 (single) or $25,000 (joint).
• Phases out at MAGI of $150,000 (single) and $300,000 (joint).
• Employers must file information returns with the IRS and provide employees with annual statements of qualified overtime pay.

Notably, the IRS will not update withholding tables for 2025, so employees will not see immediate changes in take-home pay, even though they may qualify for deductions at tax filing.

Final Thoughts

The OBBBA introduces sweeping changes with both opportunities and challenges for dealerships. While some provisions — like bonus depreciation — are direct benefits, others — like EV credit repeals — may create new hurdles.

Dealers should work closely with their tax advisors to understand the bill’s full impact on their specific operations and to maximize potential advantages.