Tax years 2025–2028Up to $10,000/yr
Works with the standard deductionUpdated June 2026
Is your car loan interest tax-deductible?
A new federal deduction lets many people write off up to $10,000 a year of interest on a new, U.S.-assembled vehicle loan — even if you take the standard deduction. Check your eligibility and estimate your savings in under a minute.
Does my car qualify?
New, U.S. final assembly, under 14,000 lbs, first-lien loan after Dec 31, 2024, personal use. Run the 8-question checker.
How much will I save?
Estimate first-year interest, the income phase-out, and your real tax savings by bracket.
How do I claim it?
New Schedule 1-A, the VIN requirement, Form 1098-VLI, and 2025 transition relief, explained.
The deduction in plain English
The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) created a temporary deduction for interest paid on a personal-use vehicle loan. IRSstatute The headline rules:
- Up to $10,000 per year of car-loan interest (not principal), per tax return. IRS
- Both standard-deduction and itemizing taxpayers can take it. IRS guidance
- Tax years 2025–2028, and it’s retroactive to Jan 1, 2025. Thomson Reuters
- The vehicle must be new, have U.S. final assembly, be under 14,000 lbs, and the loan must be a first lien taken out after Dec 31, 2024. IRS
- It phases out above $100k income (single) / $200k (joint). IRSThomson Reuters
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Most people save hundreds, not thousands. It’s a deduction (it lowers taxable income), not a dollar-for-dollar credit, and typical first-year interest is well under the $10,000 cap. CNBC
Why trust this page? We cite the IRS and the proposed regulations on every figure, date-stamp the content, and flag what’s still unsettled. The IRS rules are currently proposed (Federal Register, Jan 2, 2026) Fed. Register — we update as they finalize. We are independent and not affiliated with the IRS.