Quick answer. For tax years 2025 through 2028, interest on a loan taken out after December 31, 2024 to buy a new vehicle for personal use with final assembly in the United States can be deducted, up to $10,000. The limit drops $200 for each $1,000 (or part) of modified AGI over $100,000 ($200,000 joint). Example: $4,200 of interest at $104,300 modified AGI gives $3,200.
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The requirements in the final regulations
Treasury and the IRS issued final regulations (T.D. 10054, effective November 9, 2026). With the IRS summary page and Publication 6126, they set out these rules:
- The loan: incurred after December 31, 2024, to buy the vehicle, and secured by a first lien on it. A credit card purchase is generally not secured debt. Lease payments don't count.
- New vehicle: its original use starts with you. A dealer's sale stock doesn't start original use with the dealer.
- Kind of vehicle: a car, minivan, van, SUV, pickup truck or motorcycle made mainly for public roads, with a gross vehicle weight rating under 14,000 pounds.
- Final assembly in the United States: you may rely on the plant of manufacture in the VIN (NHTSA VIN Decoder) or the final assembly point on the vehicle label.
- Personal use: when the loan is made, you expect the vehicle to be used for personal purposes more than 50% of the time by you, your spouse or a related person.
- What's financed: sales tax, fees, service plans and extended warranties tied to the purchase can be part of the loan; negative equity from a trade-in can't. On a refinance, only the balance of the original loan counts.
- Limit and phase-out: $10,000 per return for every filing status. Schedule 1-A (2025), lines 25 to 30, takes $200 off for each $1,000 over $100,000 ($200,000 joint) and rounds any fraction up, unlike the tips and overtime parts.
- On your return: the VIN goes on Schedule 1-A every year you claim the deduction. Interest you deduct on Schedule C, E or F for business use goes in a separate column.
Sources
- IRS: One, Big, Beautiful Bill provisions, individuals and workers (updated Aug. 27, 2026)
- IRS: Internal Revenue Bulletin 2026-39, T.D. 10054, final regulations on car loan interest
- IRS Publication 6126 (Rev. 10-2026): Purchased a new vehicle?
- IRS: Schedule 1-A (Form 1040), Additional Deductions, 2025
- NHTSA VIN Decoder (linked by the IRS)
- IRS: Form 1040 instructions, including Schedule 1-A
General information checked November 2026 against the IRS sources above. It is not tax advice, and it does not tell you whether you qualify: your return, your forms and your preparer decide that. MCC Solutions is not a CPA firm and is not affiliated with the IRS. The checker only repeats your answers against the listed rules. The calculator runs in your browser, and nothing you enter is sent or saved.
Common questions
Does a used car qualify for the car loan interest deduction?
No. The vehicle's original use has to start with you. The final regulations also say buying out your own lease at or near its end generally doesn't meet that test.
How do I check where my car had its final assembly?
The IRS lets you rely on either the plant of manufacture in the VIN, which you can look up in the NHTSA VIN Decoder, or the final assembly point printed on the vehicle's label (the window sticker).
Is the $10,000 limit doubled for married couples?
No. The final regulations set $10,000 per return for every filing status, with all qualifying loans added together. Only the phase-out start point changes: $100,000 of modified AGI, or $200,000 on a joint return.
Does refinancing keep the deduction?
Generally yes, up to the balance of the original qualifying loan. Extra cash taken out or new add-ons in the refinance don't count, according to the final regulations.
What form will my lender send?
A lender that receives $600 or more of interest in the year reports it to the IRS and gives you a statement with the interest, the starting balance, the loan date and the vehicle's VIN. For 2025 the IRS let lenders meet this by making the year's total available, for example online.
Which tax years does it apply to?
Tax years 2025 through 2028, for loans taken out after December 31, 2024. You put the VIN on your return each year you claim it.
Related: Tips deduction calculator · Overtime deduction calculator · Auto loan calculator