A Tax Season Boost and the Tariff Situationship Status

• New tax policy and deductions may boost auto market sales.
• Tariffs continue to limit shoppers’ buying power.

Tax season brings finances into focus for many Americans, and healthy refunds can mean a spending uptick that spurs the economy. Since 2025, new bills and deductions are in play, which for many Americans could mean bigger paychecks and returns, reversing a relatively slow start in consumer spending so far in 2026. The auto market in particular stands to benefit from an influx of discretionary income, but the on-again, off-again tariff situationship continues to hamper shoppers’ spending power.

A Less Taxing Season?

A larger standard deduction, the elimination of taxes on tips and overtime, and a $1,776 Warrior Dividend are just a few of the ways Americans might feel financial relief during the 2026 tax season. Plus, reduced tax liability is expected to increase take-home pay, giving consumer spending an additional tailwind. For shoppers looking to turn extra cash into a new vehicle, new deductions for auto loan interest on many new, U.S.-assembled vehicles could help dollars stretch further.

A member of the military working a job with tips or overtime who buys a car eligible for the new auto loan interest deductions may have pulled a proverbial golden ticket for 2026 tax breaks, but anyone in the market for a new car can capitalize on the auto loan deductions with a little research into eligible models. Cars.com’s American-Made Index is a good starting place to understand which models are largely assembled domestically and contribute most to the U.S. economy.

The Tariffs Situationship

Tariffs have dominated headlines and spurred speculation about how they’ll affect consumers’ budgets on everyday items and big purchases like cars. So, what’s the latest? “It’s complicated.” New rulings from the Supreme Court and responses from the executive office have only added complexity to an already complex situation, but these recent rulings did not result in any changes to U.S.-implemented tariffs affecting autos, parts, and key metals or minerals. However, tariffs imposed by Mexico will likely raise costs for vehicles and parts brought in from one of the American automarket’s largest importers. And if additional auto part tariffs are enacted, Americans will likely feel the effects most directly in collision repair costs — all the more reason to drive safely. 

2026 Monthly Industry Insights Report

Cars.com’s monthly Industry Insights reports provide expert analysis on consumer demand, market supply, pricing, affordability and more. Explore the January 2026 Industry Insights report to go deeper into your corner of the market