Car Loan Interest Deduction Calculator (2026)
Bought a new, US-assembled vehicle with a loan taken out after Dec 31, 2024? You may deduct up to $10,000 of the interest per year from your federal taxable income — no itemizing required. Check your numbers.
Which vehicles qualify
The rules are strict — check every box before counting on this deduction:
- New vehicles only. Used cars and leases don't qualify. Motorcycles, cars, SUVs, pickups, and vans under 14,000 lbs are all eligible vehicle types.
- Final assembly in the United States. This is about where the vehicle was built, not the badge — many Toyotas, Hondas, and BMWs qualify while some "American" models built in Mexico or Canada don't. Check the assembly plant on the window sticker or run the VIN through the NHTSA decoder.
- Personal use. Business and commercial vehicles have their own rules.
- Loan originated after December 31, 2024 and secured by the vehicle. Refinancing an eligible loan generally preserves eligibility; borrowing from a relative doesn't count.
Income limits
The deduction phases out between $100,000–$150,000 MAGI (single) and $200,000–$250,000 (joint), dropping $200 per $1,000 over the threshold. Within those limits, you can deduct up to $10,000 of interest per year through 2028 — and because it's available on top of the standard deduction, ordinary car buyers benefit.
What paperwork you'll get
Starting with the 2026 tax year, lenders must send Form 1098-VLI showing the interest you paid. For 2025 returns, use your loan statements or payoff schedule. You'll also report the vehicle's VIN on your tax return, so keep it handy along with the window sticker proving US final assembly.
Frequently asked questions
Does a used car loan qualify for the interest deduction?
No. Only new vehicles qualify — the vehicle's original use must begin with you. Certified pre-owned and dealer demos with prior titling don't count.
How do I know if my car was assembled in the US?
Check the 'final assembly point' on the window sticker, or enter your VIN in the free NHTSA VIN decoder — it lists the assembly plant country. A VIN starting with 1, 4, or 5 generally indicates US assembly.
Do leases qualify?
No. Lease payments aren't loan interest. Only a bona fide auto loan secured by the vehicle qualifies.
Does an EV qualify for the car loan interest deduction?
Yes, powertrain doesn't matter — a new US-assembled EV, hybrid, or gas vehicle all qualify, as long as the loan and income requirements are met.
Can I claim this and still take the standard deduction?
Yes. The car loan interest deduction is claimed in addition to the standard deduction — no itemizing required.