Trump touts car affordability, auto tax breaks during State of the Union

On the Dash:

• Dealers should note that tax-deductible auto loan interest applies only to American-made vehicles, which may influence sales and customer inquiries.
• Despite Trump’s claims, new-car prices have increased slightly, underscoring the need for dealers to accurately communicate market trends.
• Rising insurance and regional costs, as reflected in policy statements, may affect customer buying decisions and financing considerations.

On February 24, 2026, President Donald Trump discussed car affordability during his two-hour State of the Union address, noting that prices for items like automobiles have fallen since he took office during his second term.

During the address, the President attributed the higher prices Americans have experienced to policies supported by Democrats under former President Joe Biden, saying those policies contributed to increased costs at car dealerships and elsewhere.

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Data from Kelley Blue Book illustrates that the average price of a new car when President Trump began his second term in January 2025 was $48,641. By January 2026, the average new car price had reached $49,191.

Monthly average transaction prices during Trump’s second presidency were as follows:

• December 2025: $50,362
• November 2025: $49,814
• October 2025: $49,766
• September 2025: $50,080
• August 2025: $49,077
• July 2025: $48,841
• June 2025: $48,907
• May 2025: $48,799
• April 2025: $48,699
• March 2025: $47,462
• February 2025: $48,039
• January 2025: $48,641

In addition to discussing prices, Trump touted legislation he signed during his first year back in office that makes interest on auto loans tax-deductible if the vehicle is made in America. The provision was included in his signature legislation, the One Big Beautiful Bill, passed in the summer of 2025.

Trump also linked immigration policy to consumer costs, including car insurance rates, during the speech.

The president further cited gasoline prices, saying they were “averaging below $2.30 a gallon in most states.” AAA reported the national average price of a gallon of gas on Feb. 24 was $2.91, with the average in Iowa at $2.55.