Car Loan Interest Deduction Calculator
New-car buyers can deduct up to $10,000 a year of loan interest for 2025–2028 if the vehicle had final assembly in the US. Check your VIN, estimate the interest you paid and see how much of it you can deduct after the income phase-out.
Formulas shown on this page · Last reviewed October 2026
Who qualifies – checklist
- Years: tax years 2025, 2026, 2027 and 2028.
- Loan: taken out after December 31, 2024, secured by a lien on the vehicle, for personal (not business) use.
- Vehicle: new (original use starts with you) car, minivan, van, SUV, pickup or motorcycle with a gross vehicle weight rating under 14,000 lb. Used vehicles and leases do not qualify.
- Made in the USA: final assembly in the United States, shown on the window sticker or by the plant country in the NHTSA VIN decoder.
- On your return: you must include the vehicle’s VIN for every year you claim it. Itemizers and standard-deduction filers can both claim it.
How the calculation works
interest = sum of the interest part of each payment made in the tax year
deduction = min(interest, $10,000) − $200 × ⌈(MAGI − threshold) ÷ $1,000⌉
threshold = $100,000 ($200,000 married filing jointly)
tax saved ≈ deduction × your federal bracket
The loan estimate uses a standard amortization schedule with equal monthly payments. Your lender’s year-end statement shows the exact interest you paid – use that number when you file. The saving shown is federal income tax only; state treatment varies.
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Sources (checked October 24, 2026)
- IRS: Working Families Tax Cuts – deductions for working Americans (car loan interest)
- IRS: Internal Revenue Bulletin 2026-39 (final regulations, Sep 21, 2026)
- NHTSA VIN Decoder (vPIC)
This calculator gives an estimate for planning, not tax advice. Confirm eligibility with the IRS instructions or a tax professional.
Frequently asked questions
What is the car loan interest deduction?
For tax years 2025 through 2028, you can deduct up to $10,000 a year of interest paid on a loan for a new car, minivan, van, SUV, pickup or motorcycle under 14,000 lb that had final assembly in the United States, bought for personal use with a loan taken out after December 31, 2024. You can claim it whether or not you itemize.
How do I know if my car was assembled in the US?
Check the plant location on the dealer’s window sticker (the vehicle information label) or decode your VIN with NHTSA’s free VIN Decoder, which lists the plant country. The IRS final regulations point taxpayers to the NHTSA decoder. Enter your VIN above to run that check.
How does the income phase-out work?
The deduction drops by $200 for every $1,000 (or part of $1,000) of modified AGI above $100,000, or $200,000 for married couples filing jointly. It reaches zero at $150,000 single or $250,000 joint. Example: $2,581 of interest with $105,500 MAGI (single) is reduced by $1,200 to $1,381.
Do used cars or leases qualify?
No. The vehicle’s original use must start with you, so used vehicles do not qualify, and lease payments are not loan interest. Refinanced balances of a qualifying loan generally still count.
How much tax will I actually save?
The deduction lowers taxable income, so the saving is roughly the deductible interest times your federal bracket. A $40,000 loan at 7% for 60 months starting January 2026 pays about $2,581 of interest in 2026; at $85,000 MAGI (single) all $2,581 is deductible, saving about $568 in the 22% bracket.