Car loan interest deduction calculator
Check your VIN for U.S. assembly, estimate this year's interest and see what the new deduction is worth to you.
- Up to $10,000 of interest a year on a new car, SUV, pickup or motorcycle.
- Final assembly in the United States, loan taken out after 2024.
- For tax years 2025 through 2028, itemizing or not.
How the car loan interest deduction works
Interest on a car loan used to be a personal expense you couldn't deduct. From 2025 through 2028, interest on a loan for a new vehicle assembled in the United States comes off your taxable income, up to $10,000 a year.
You claim it on Schedule 1-A and write the VIN on your return. Your lender sends a statement with the interest you paid. You don't need to itemize.
| The vehicle | New, with its original use starting with you. A car, minivan, van, SUV, pickup or motorcycle under 14,000 pounds gross vehicle weight, with final assembly in the United States. |
|---|---|
| The loan | Taken out after December 31, 2024, to buy the vehicle, and secured by a first lien on it. Refinancing that loan still counts. |
| Doesn't count | Leases, used vehicles, business or fleet vehicles, salvage titles, and loans from relatives. |
| Yearly limit | $10,000 of interest. |
| Income limit | Drops by $200 for each $1,000, or part of $1,000, of income over $100,000 ($200,000 joint). Gone at $150,000 ($250,000 joint). |
| Married couples | No joint return required, unlike the tips, overtime and senior deductions. |
Where was your car assembled?
The brand doesn't decide it; the plant does. The same model can be built in Kentucky for one buyer and in Mexico or Japan for another, so check your own vehicle.
Ways to check
- The window sticker, which lists the final assembly point.
- The plant of manufacture in your VIN, through the NHTSA decoder. The check above does this for you.
- The 11th character of the VIN is the plant code; the decoder turns it into a city and country.
Common surprises
- A VIN starting with 1, 4 or 5 means a U.S.-based maker, not a U.S. plant. The plant is what counts.
- Some American brands build popular models in Mexico or Canada, and some foreign brands build in the United States.
- A car bought in 2024 and refinanced in 2025 doesn't qualify; the original loan has to be from 2025 or later.
Questions people ask
How does the car loan interest deduction work?
For tax years 2025 through 2028 you can deduct up to $10,000 a year of interest on a loan for a new, U.S.-assembled car, SUV, pickup, van or motorcycle bought for personal use. You claim it on Schedule 1-A with your VIN, whether or not you itemize.
How do I know if my car was assembled in the U.S.?
The final assembly location is on the window sticker. The IRS also lets you rely on the plant of manufacture in the VIN, which you can look up with the NHTSA VIN decoder.
Do used cars or leases qualify?
No. The vehicle must be new, meaning its original use starts with you, and lease payments never qualify. A refinanced qualifying loan generally still qualifies.
What is the income limit?
The deduction drops by $200 for each $1,000, or part of $1,000, of modified adjusted gross income above $100,000, or $200,000 on a joint return.
Do I need to file jointly?
No. Unlike the tips, overtime and senior deductions, the car loan interest deduction does not require married couples to file jointly. The income limit starts at $100,000 for every filing status except joint.