Car Loan Interest Tax Deduction Calculator
The OBBBA lets you deduct up to $10,000 in car loan interest. See your potential savings — free, instant, no signup.
New, US-assembled vehicle only
Modified Adjusted Gross Income
Car Loan Interest Deduction
$4,000
✅ You qualify for the full deduction
⚠️ This calculator provides estimates for informational and educational purposes only. It is not tax advice. Results are based on the One Big Beautiful Bill Act (OBBBA) and IRS Schedule 1-A. Consult a qualified tax professional for your specific situation.
Which Vehicles Qualify?
The deduction applies to loans for new vehicles assembled in the United States. The vehicle must be purchased with a loan (not leased or bought with cash), and the interest must be on that loan.
How to check if your car qualifies:
- • Find your VIN (17 characters, on dashboard or registration)
- • Check the NHTSA Vehicle Assembly database (nhtsa.gov/vin-decoder)
- • Look for "Final Assembly Point: USA" or similar U.S. assembly indicator
- • Your manufacturer's website usually lists assembly plant location
Many vehicles from Ford, GM (Chevrolet, GMC, Cadillac), Toyota (U.S. plants), Honda (U.S. plants), and Tesla qualify. Imported luxury brands and many Asian/European models do not.
Income Limits and Phase-Out
The car loan interest deduction has different income limits from the overtime and tips deductions:
| Filing Status | Full Deduction (MAGI ≤) | No Deduction (MAGI ≥) |
|---|---|---|
| Single | $100,000 | $150,000 |
| Married Filing Jointly | $200,000 | $250,000 |
Example:If you're single, paid $8,000 in car loan interest this year, and your MAGI is $95,000:
- • You qualify for the full deduction (below $100K threshold)
- • Interest paid: $8,000 (under the $10,000 cap)
- • At the 22% bracket: $8,000 × 22% = $1,760 saved
How to Claim the Car Loan Interest Deduction
- Confirm your vehicle was assembled in the U.S. (check VIN)
- Get the total interest paid from your lender's year-end statement (Form 1098 or equivalent)
- Report up to $10,000 on Schedule 1-A
- The deduction reduces your AGI, lowering your federal income tax
Your lender should provide a year-end interest statement. If they don't send one automatically, request it — most auto lenders can provide the total interest paid for the tax year.
Common Qualifying Vehicles (Examples)
This is not a complete list — always verify your specific VIN:
- • Ford: F-150, Escape, Explorer, Bronco (most models)
- • Chevrolet: Silverado, Equinox, Malibu, Tahoe
- • Tesla: Model 3, Model Y, Model S, Model X (all U.S.-assembled)
- • Toyota: Camry, RAV4 (Kentucky/Indiana plants only)
- • Honda: Accord, Civic, CR-V (Ohio/Indiana plants only)
Note: Even within the same model, some units are assembled in the U.S. and others abroad. Always check your specific VIN.
Frequently Asked Questions
Which vehicles qualify for the car loan interest deduction?
The deduction applies to loans for new vehicles assembled in the United States. Used vehicles and imported vehicles generally do not qualify. You can check your VIN through the NHTSA vehicle assembly database or your manufacturer's website to confirm if your car was assembled in the U.S.
How much can I deduct?
Up to $10,000 in interest paid on a qualifying auto loan per year. The deduction is reduced for single filers with MAGI between $100,000 and $150,000, and for married filing jointly between $200,000 and $250,000.
Do I need to itemize to claim the car loan deduction?
No. Like all OBBBA deductions, the car loan interest deduction is an above-the-line adjustment on Schedule 1-A. You can claim it whether you take the standard deduction or itemize.
Does leasing a car qualify?
No. The OBBBA car loan interest deduction applies to interest paid on an auto loan for vehicle ownership. Lease payments do not qualify, since you are not paying loan interest — you are paying a lease fee.
Can I claim this for a loan on a used car?
Generally no. The deduction is intended for loans on new vehicles assembled in the United States. However, if you took out a loan to purchase a qualifying vehicle (even if it was lightly used), the interest may qualify — check with a tax professional for your specific situation.
How is this different from the EV tax credit?
The EV tax credit (up to $7,500) is a separate program for qualifying electric vehicles. The OBBBA car loan interest deduction reduces your taxable income by the amount of interest paid (up to $10,000), regardless of whether the vehicle is electric, gas, or hybrid — as long as it was assembled in the U.S.