2026 car loan interest deduction calculator

The vehicle must be new, meaning its original use started with you, and its final assembly must have taken place in the United States. It must be a car, minivan, van, SUV, pickup truck, or motorcycle with a gross vehicle weight rating under 14,000 pounds, made mainly for use on public roads.

The loan must have been taken out after December 31, 2024, to buy the vehicle, be secured by a first lien on it, and be for a vehicle you expect to use for personal use more than 50% of the time. The deduction applies to tax years 2025 through 2028 and is claimed on Schedule 1-A, Part IV, with each vehicle’s VIN.

No. Used vehicles don’t qualify, and lease payments aren’t loan interest. Buying a car at the end of a lease usually doesn’t qualify either, because the vehicle’s original use started with the leasing company.

A new vehicle from a previous model year still counts as new if you are its first owner.

The final assembly point is printed on the label attached to new vehicles at the dealer, and you can rely on it. You can also enter your VIN in the National Highway Traffic Safety Administration’s VIN decoder, which shows the plant of manufacture.

No. Only loans taken out after December 31, 2024, qualify, even if you are still paying interest in 2026 on an earlier loan. If you refinance a loan that qualifies, interest on the new loan still counts, up to the balance that was refinanced, as long as the new loan is secured by a first lien on the same vehicle.

The deduction, after the $10,000 cap, is reduced by $200 for each $1,000 of modified adjusted gross income (MAGI) above $100,000, or $200,000 if you are married filing jointly. The law counts any part of $1,000 as a full step, so $1 over the threshold already costs $200.

The full $10,000 is gone once MAGI passes $149,000, or $249,000 on a joint return. Smaller amounts are phased out sooner.

For most people, MAGI is the adjusted gross income on Form 1040. It can be higher if you exclude foreign earned income or income from U.S. territories.

Yes, married people filing separately can claim it: the law doesn’t require a joint return, and the phase-out starts at $100,000. The $10,000 limit applies per return, whatever your filing status, so a married couple filing jointly can deduct no more than $10,000 in total, even with two qualifying vehicles.

It is the form lenders use to report the interest you paid on a qualifying vehicle loan, in box 1. Lenders send it when they receive $600 or more of interest in a year. If you don’t get one, use your loan statements.

Not everywhere. This is a federal deduction, and each state decides whether to allow it. Some states, such as Oregon, don’t allow it on the state return: Oregon’s SB 1507 (2026) disconnects from the federal car loan interest deduction. Check with your state’s tax agency before you file.

Yes, as long as you expected, when you took out the loan, to use the vehicle for personal use more than 50% of the time. Interest you deduct as a business expense on Schedule C, E, or F can’t be deducted again here, so enter only the rest.

Interest on the price of the vehicle and on items usually financed with it, such as sales tax, vehicle fees, extended warranties, and service plans, counts. Interest on the unpaid loan of a trade-in rolled into the new loan (negative equity), insurance, or a trailer doesn’t.

Qualifying surviving spouses can claim the deduction, with the $100,000 phase-out threshold. But they also have a different, larger standard deduction (the same as married filing jointly), which this calculator doesn’t include, so its savings estimate wouldn’t be right for you. Use the Schedule 1-A instructions or tax software for your figures.