Car Loan Interest Deduction Calculator (2025–2028)
You may deduct up to $10,000 of interest per year on a loan for a new, US-assembled personal vehicle purchased after December 31, 2024. Enter the loan terms and your MAGI to see the five-year schedule.
Last updated: October 20, 2026
| Loan year | Interest | Deduction | Est. tax saved |
|---|---|---|---|
| Year 1 | $2,835 | $2,835 | $624 |
| Year 2 | $2,403 | $2,403 | $529 |
| Year 3 | $1,938 | $1,938 | $426 |
| Year 4 | $1,440 | $1,440 | $317 |
| Year 5 | $904 | $904 | $199 |
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- Up to $10,000 of interest per year is deductible for tax years 2025 through 2028, above the line even if you take the standard deduction. IRC §163(h)(4)(A), (C)
- Does my car qualify? Checklist: it is new (original use starts with you), purchased after December 31, 2024, used personally, secured by a first lien, and its final assembly occurred in the United States. It must be a qualifying passenger vehicle under 14,000 pounds GVWR.
- Check the assembly plant: use the vehicle window sticker and the NHTSA VIN Decoder to look up the VIN’s assembly plant. The VIN must be included on your tax return.
- Phase-out: the statute reduces the otherwise allowable amount by $200 for each $1,000 (or portion thereof) of MAGI above $100,000 single / $200,000 joint.
FAQ
Do used cars qualify?
No. The vehicle’s original use must start with you; a used vehicle does not qualify.
How do I know where my car was assembled?
Check the window sticker and use NHTSA’s VIN Decoder assembly-plant lookup. The VIN must also be included on your federal return.
Do leases qualify?
No. The statute covers interest on purchase indebtedness secured by a first lien, not lease financing.
Does refinancing count?
A refinance of a qualifying loan can qualify, but only up to the amount of the refinanced indebtedness and if it remains secured by a first lien.
Are trucks and SUVs eligible?
Potentially. Cars, minivans, vans, SUVs, pickups, and motorcycles can qualify if they meet the statute’s personal-use, US-final-assembly, and under-14,000-pound requirements.
Do I need to itemize?
No. The deduction is made available to non-itemizers through the above-the-line exception in IRC §163(h)(4)(A).
Methodology
$200 × ceiling(max(0, MAGI − threshold) / 1,000), floored at zero; tax savings use the existing exact bracket walk. The $200 rate and “or portion thereof” ceiling rule are from enacted Pub. L. 119-21 §70203, which added IRC §163(h)(4)(C)(ii)(I); the request’s $100 figure does not match that statute. Thresholds are $100,000 single / $200,000 joint. Qualification requires a new applicable passenger vehicle, personal use, purchase indebtedness incurred after December 31, 2024, a first lien, US final assembly, and VIN reporting. MAGI is treated as AGI; Head of Household uses single-filer tables; MFS is not supported.Sources: IRC §163(h)(4), §63(b)(7), as added by Pub. L. 119-21 §70203 (139 Stat. 176–178); NHTSA VIN Decoder — accessed October 2026Last updated: October 20, 2026 · Reviewed against official IRS guidanceContinue with OBBBA Tax Center · qualifying cars guide · car-loan deduction rules guide