IRS qualified passenger vehicle loan interest
Car loan interest deduction calculator
Direct answer: For tax years 2025–2028, you may deduct up to $10,000 of qualified passenger vehicle loan interest on a new U.S.-assembled personal-use vehicle loan originated after December 31, 2024, on Schedule 1-A—whether or not you itemize—subject to a MAGI phase-out above $100,000 ($200,000 joint).
See the methodology for worked examples and public test cases. This free worksheet applies the IRS $10,000 cap and the Schedule 1-A MAGI phase-out for the deduction the IRS calls “no tax on car loan interest” (also called a vehicle loan interest deduction or auto loan interest deduction). It runs in your browser and does not file a return.
How the IRS car loan interest deduction is figured
The deduction comes from section 70203 of Public Law 119-21, which added section 163(h)(4). Personal interest is still generally nondeductible. Qualified passenger vehicle loan interest is the exception, and only for tax years beginning after December 31, 2024, and before January 1, 2029. You claim it on Schedule 1-A even if you take the standard deduction. On a 2025 Form 1040 it moves from Schedule 1-A, line 38, to line 13b. It does not reduce adjusted gross income.
Add the qualified interest from every loan on the return. Interest you deduct on Schedule C, E, or F is left out, so you do not deduct the same dollars twice. The total is limited to $10,000. That capped amount is then reduced by $200 for each $1,000, or part of $1,000, of Schedule 1-A MAGI over $100,000, or over $200,000 if you are married filing jointly. A fraction of $1,000 rounds up. One cent over the threshold reduces a deduction by $200.
A single filer with $4,200.00 of qualified interest and MAGI of $112,400.00 is $12,400.00 over the threshold. That is 13 blocks after rounding up, a $2,600.00 reduction, and a deduction of $1,600.00. At a 22% marginal rate the federal income-tax estimate is $352.00. Your return can differ.
What has to be true before the number counts
The interest has to be on a loan you originated after December 31, 2024, to buy a new car, minivan, van, SUV, pickup, or motorcycle for personal use, secured by a first lien, with final assembly in the United States and a gross vehicle weight rating under 14,000 pounds. Leases, related-party loans, fleet sales, salvage-title vehicles, and negative equity do not qualify. You must report the VIN. The eligibility page walks through each test, and the phase-out page shows the rounding with more examples.
NHTSA vPIC
Check the VIN plant of manufacture
The IRS says you may rely on the plant of manufacture in the VIN, or on the final-assembly label on the vehicle. Results show as US plant reported, Non-US plant reported, or Unable to verify, and feed the U.S. final-assembly checklist answer when the calculator is on the same page.
Privacy: The VIN is sent from your browser to NHTSA’s public decoder. This site does not receive, log, or store the VIN.
Read the rule before you rely on the estimate
Sources
- Public Law 119-21, §70203 (July 4, 2025). The One, Big, Beautiful Bill Act. Section 70203 added IRC §163(h)(4), amended §63(b), and added §6050AA.
- Final regulations, Car Loan Interest Deduction (Sept. 8, 2026). Treasury Decision published at 91 FR. Effective November 9, 2026. Treas. Reg. §§1.163-16 and 1.6050AA-1 apply to tax years 2025–2028.
- IRS Topic No. 505, Interest expense. IRS summary of the 2025–2028 deduction, the $10,000 cap, first-lien requirement, and U.S. final assembly.
- 2025 Schedule 1-A (Form 1040). Part I MAGI lines 1–3 and Part IV lines 22–30. Line 38 is the total additional deductions.
- 2025 Instructions for Form 1040. Line 13b comes from Schedule 1-A, line 38. The Schedule 1-A instructions define QPVLI, personal use, and the phase-out.
- 2026 draft Schedule 1-A (created June 16, 2026). Draft — do not file. Part IV is lines 28–36. Line 44 goes to Form 1040 line 13a on this draft. Line numbers can change.