Car Loan Interest Deduction Calculator (2025 to 2028)
Tick the vehicle checks, then enter the interest you pay this year and your income. The receipt shows whether you qualify and how much you can deduct.
Rules checked against the primary sources on .
The six tests
The vehicle must be new, its final assembly must be in the United States, and its gross vehicle weight rating must be under 14,000 pounds. The loan must be taken out after December 31, 2024, be secured by the vehicle, and be for personal use. Leases are out. You must give the VIN on your return.
| Situation | Rule |
|---|---|
| Maximum deduction | $10,000 of interest a year |
| Phase-out starts | $100,000 MAGI ($200,000 joint) |
| Phase-out rate | $200 per $1,000 or part of $1,000 over |
| Years | 2025 to 2028 |
Example
Sam, single, pays $2,400 of interest in 2026 on a new pickup built in Texas. MAGI is $104,500, which is $4,500 over the line. That counts as 5 steps of $1,000 (part of a step rounds up), so the cut is $1,000. Sam deducts $1,400.
Sources
Common questions
How much car loan interest can I deduct?
Up to $10,000 of interest a year for tax years 2025 to 2028, on a loan for a new vehicle whose final assembly took place in the United States.
Does a used car qualify?
No. The original use of the vehicle must start with you, so used vehicles do not qualify. Leases do not qualify either.
How do I know where my car was assembled?
The window sticker lists the final assembly point. A VIN that starts with 1, 4 or 5 means the maker is in the US, but the NHTSA VIN decoder shows the plant.
What is the income limit?
The deduction drops by $200 for each $1,000, or part of $1,000, of modified AGI over $100,000, or $200,000 on a joint return.
Can I refinance and still deduct the interest?
A refinance of a qualifying loan can still qualify, up to the balance of the original loan. Interest on extra cash taken out does not.