Car Loan Interest Deduction Calculator
This calculator estimates your deductible car loan interest under the 2025 to 2028 federal tax deduction, based on the interest you paid, your MAGI, filing status, and the vehicle's eligibility.
How this is calculated
The car loan interest deduction, created by the One Big Beautiful Bill Act, lets eligible taxpayers deduct up to $10,000 of interest paid on a qualifying vehicle loan each year from 2025 through 2028, whether or not they itemize. It is claimed on Schedule 1-A, Part IV, and totalled into Form 1040, line 13b.
To qualify, the loan must have originated after December 31, 2024, be secured by a first lien on the vehicle, and have been used to purchase (not lease) the vehicle for personal use. The vehicle itself must be new (its original use must begin with the taxpayer), assembled in the United States, and one of the eligible types: car, minivan, van, sport utility vehicle, pickup truck, motorcycle, with a gross vehicle weight rating under 14,000 lbs.
Above a modified adjusted gross income (MAGI) of $100,000 (single filers) or $200,000 (married filing jointly), the deduction phases out: it is reduced by $200 for every $1,000 of MAGI over the threshold, rounded up to the next $1,000. That means the deduction reaches zero once MAGI is $50,000 above the threshold.
The vehicle-eligibility rules above come from proposed Treasury regulations, not yet finalized as of the last-verified date below. They could still change before being adopted.
Worked example
Suppose you are single, your MAGI for 2025 is $110,000, and you paid $3,200 in interest on a loan taken out on March 14, 2025 to buy a new, US-assembled car for personal use, secured by a first lien. The car qualifies, but your MAGI is above the $100,000 threshold, so the deduction is reduced:
| Step | Amount |
|---|---|
| Total qualified passenger vehicle loan interest | $3,200 |
| Smaller of interest paid or the annual cap ($10,000) | $3,200 |
| Modified adjusted gross income (MAGI) | $110,000 |
| MAGI phaseout threshold (single) | $100,000 |
| MAGI over the threshold | $10,000 |
| Excess divided by $1,000, rounded up | 10 |
| Phaseout reduction ($200 per step) | $2,000 |
| Deductible car loan interest | $1,200 |
Open this example in the calculator to change any figure.
Sources
Frequently asked questions
- Does refinancing a car loan reset my eligibility?
- Generally no. Under the proposed regulations, a loan that refinances a qualifying loan remains eligible, up to the outstanding balance of the original loan at the time of refinancing, as long as the new loan is secured by a first lien on the same vehicle and the borrower does not change (with limited exceptions, such as the original borrower's death).
- Can I claim this if I take the standard deduction?
- Yes. This is an above-the-line deduction claimed on Schedule 1-A, available whether you take the standard deduction or itemize on Schedule A.
- What counts as MAGI for this deduction?
- Schedule 1-A defines MAGI, for this purpose, as your adjusted gross income (Form 1040, line 11b) plus any excluded Puerto Rico income and certain foreign earned income exclusions (Form 2555 and Form 4563).
- Does a used car ever qualify?
- No. The vehicle's original use must commence with you, the taxpayer, meaning you must be the first person to take delivery of it. Used vehicles do not qualify.
- What happens if I do not know the vehicle's GVWR?
- Gross vehicle weight rating is listed on the vehicle's federal certification label, typically on the driver's side door jamb, or in the manufacturer's documentation.
- Is this deduction available after 2028?
- No. It applies only to tax years beginning after December 31, 2024 and before December 31, 2028 (tax years 2025 through 2028).
- Can I claim interest on more than one vehicle?
- Yes. Schedule 1-A, Part IV has space for two vehicles; if you have more, the instructions explain how to report the rest. The $10,000 cap applies to your total interest across all qualifying vehicles, not per vehicle.
- Do I need to report the vehicle's VIN?
- Yes. The vehicle identification number of each qualifying vehicle must be reported on Schedule 1-A.