Car loan interest deduction calculator (2025–2028)
A free deduction checker for your car loan. See how much interest you can deduct and what it saves you, including the income phase-out that most articles get wrong.
How the math works
The deduction is your interest for the year, capped at $10,000, and then reduced if your modified adjusted gross income is above $100,000 (single) or $200,000 (married filing jointly). The reduction is $200 for every $1,000, or any part of $1,000, over the line.
The detail that matters: the reduction is subtracted from your interest, not from the $10,000 cap. That is what the statute says, and it means the phase-out bites much earlier for ordinary loans than the "$100,000 to $150,000" headline suggests.
Two worked examples
- Big loan. Single filer, $120,000 income, $12,000 of interest. Cap it to $10,000. Income is $20,000 over, so subtract 20 × $200 = $4,000. Deduction: $6,000.
- Ordinary loan. Single filer, $120,000 income, $3,000 of interest. Nothing to cap. Subtract the same $4,000. Deduction: $0. At that income you need more than $4,000 of interest before the deduction is worth anything.
Married filing jointly gets the $200,000 threshold. Head of household and married filing separately use the $100,000 threshold.
What "tax savings" means here
A deduction lowers your taxable income, so it saves you the deduction times your marginal rate. A $2,000 deduction at the 22% bracket is about $440 back. Pick the rate that matches your top bracket; if unsure, 22% covers most households in the $50,000 to $100,000 range.
Does your car qualify at all?
The calculator assumes the vehicle and loan meet the rules. If you haven't checked, run your VIN through the checker first. Assembly location is the one that surprises people.
- Up to $10,000 a year of interest on a qualifying car loan, for tax years 2025 through 2028.
- You get it whether or not you itemize. It sits on Form 1040, Schedule 1-A, Part IV, "No Tax on Car Loan Interest."
- Income limit: the deduction shrinks by $200 for every $1,000 (or part of one) of modified adjusted gross income above $100,000 single or $200,000 married filing jointly. The cut comes off your actual interest, not off the $10,000 cap, so a small loan can hit $0 well before $150,000.
- The vehicle: a car, minivan, van, SUV, pickup, or motorcycle, under 14,000 lb, bought new (you are the first owner), and finally assembled in the United States. Brand does not matter; a Honda from Ohio qualifies and a Ford from Mexico does not.
- The loan: started after December 31, 2024, secured by a first lien on the vehicle, from a lender that is not a relative or a business you own. Personal use only. Leases don't count. Refinancing a qualifying loan generally keeps it qualifying.
- Paperwork: you must enter the VIN on your return. Lenders send Form 1098-VLI if you paid $600 or more in interest.
FAQ
What is the income limit?
The deduction is reduced by $200 for every $1,000 (or part of $1,000) that your modified adjusted gross income exceeds $100,000 (single) or $200,000 (married filing jointly). The reduction comes off your interest, not off the $10,000 cap, so a $3,000-interest loan is fully phased out by about $115,000 of income. Only someone at the full $10,000 keeps anything up to $150,000 / $250,000.
Do I need to itemize?
No. The deduction is available whether you take the standard deduction or itemize.
How do I claim it?
On Form 1040, Schedule 1-A (Additional Deductions), Part IV, "No Tax on Car Loan Interest." You must enter the vehicle's VIN on the return.