Car loan interest deduction calculator (2025–2028)

Estimate the new deduction for interest on a loan for a new, US-assembled vehicle: $10,000 cap, $200-per-$1,000 phase-out over $100,000 ($200,000 joint).

Figures last checked 21 Oct 2026

Estimates only, not tax advice. Results are for general information. Your actual tax depends on your full return; check with the IRS or a qualified tax professional.

From your lender's statement. Lease payments do not count.
Modified adjusted gross income. For most people this is the adjusted gross income (AGI) on Form 1040 (line 11b on the 2025 form). Add back any foreign earned income or Puerto Rico income you excluded.
Checklist – all must be true
Enter your numbers to see the estimate.

The rules in plain English

  • Years: interest paid in 2025 through 2028.
  • Maximum: $10,000 of interest a year.
  • Phase-out: reduced by $200 for each $1,000 – or part of $1,000 – of MAGI over $100,000 ($200,000 if married filing jointly). So even $1 over the threshold costs $200. The full $10,000 is gone once MAGI is more than $149,000 ($249,000 joint).
  • Available whether you itemize or not. You must include the vehicle identification number (VIN) on your return for each year you claim it.
  • Unlike the tips, overtime and senior deductions, the Schedule 1-A instructions do not require a joint return for this one.

Which vehicles qualify: the US-assembly requirement

The vehicle must have undergone final assembly in the United States. A car from a US brand assembled abroad does not qualify, and a foreign brand assembled in a US plant can. You can check it two ways the IRS accepts:

  1. The vehicle information label on new cars at the dealer, which lists the final assembly point.
  2. The plant of manufacture in the VIN, which you can look up with the free NHTSA VIN Decoder.

It must also be new (original use starts with you), a car, minivan, van, SUV, pickup or motorcycle with a gross vehicle weight rating under 14,000 pounds, made mainly for public roads, and bought mainly for personal use.

Which loans qualify

  • Originated after 31 December 2024, by you, to buy the vehicle, and secured by a first lien on it.
  • Amounts customarily financed with the car count (for example sales tax, service plans, extended warranties, vehicle fees). Negative equity rolled in from a trade-in, insurance and trailers do not.
  • A later refinance of a qualifying loan generally still qualifies, up to the balance refinanced.
  • Interest you already deduct as a business expense (Schedule C, E or F) cannot be deducted again here.

Worked example: single, MAGI $112,400, $4,200 of interest

Interest paid (under the $10,000 cap)$4,200
MAGI over $100,000$12,400
$1,000s or part: 12.4 rounds up to 13 × $200− $2,600
Deduction$1,600

Frequently asked questions

Does a used car qualify?

No. The original use of the vehicle must start with you.

Does a lease count?

No. Lease payments are not loan interest and do not qualify.

How do I know if my car was assembled in the US?

Check the vehicle information label (window sticker) or look up your VIN's plant of manufacture on the NHTSA VIN Decoder.

Why does a small amount over $100,000 already reduce my deduction?

The law reduces it by $200 for each $1,000 or portion of $1,000 over the threshold, so any part of $1,000 counts as a full step.

Is my data stored?

No. Everything is calculated in your browser.

Official sources

Every figure on this page was checked against these official pages on 21 Oct 2026.