EV Loan Interest Deduction Calculator
Electric vehicle loans rack up serious interest. See how much of it comes off your federal taxes under the OBBBA.
New, US-assembled vehicle only
Modified Adjusted Gross Income
Car Loan Interest Deduction
$2,700
✅ 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.
Why EV Buyers Should Look Twice
Buyers who missed the $7,500 EV credit (income too high, battery rules, used vehicle) often still qualify for the loan interest deduction. And unlike the credit, it pays out every year you carry the loan:
- • US-assembled EV required (check VIN assembly country)
- • Loan signed 2025–2028, vehicle placed in service same period
- • Up to $10,000/year of interest, per qualifying loan
- • MAGI under $100k single / $200k MFJ
Worked Example: Model 3 on a 5-Year Note
Alex financed a US-assembled Model 3 for $42,000 at 6.9% over 60 months. Year-one interest: about $2,750. Single, MAGI $85,000.
- • Interest under the $10,000 cap: $2,750
- • 22% bracket → $605 back in year one
- • Over 5 years of the loan: roughly $1,900 total back as interest declines
Find your annual interest on your loan statement or amortization schedule — not the monthly payment.
Stacking with the EV Tax Credit
If your EV also qualified for the 30D credit ($7,500 new) or 25E ($4,000 used), the interest deduction stacks on top — different provisions, no offset. The income limits differ, though: the credits cut off at $150k/$300k MAGI while the interest deduction cuts at $100k/$200k.
Frequently Asked Questions
Can I deduct EV loan interest under the OBBBA?
Yes, if the vehicle was assembled in the US, the loan was signed in 2025–2028, and your MAGI is under $100,000 (single) or $200,000 (MFJ). The deduction covers up to $10,000 of interest per year on passenger vehicle loans — electric vehicles assembled in the US (Tesla Model 3/Y, Mustang Mach-E, and others) commonly qualify.
I bought a used EV — does it qualify for the interest deduction?
The loan interest deduction is not limited to new vehicles — it applies to qualifying loans regardless of the car being new or used, as long as the vehicle is US-assembled and placed in service during 2025–2028. Note this is different from the used-EV tax credit (25E), which has its own rules.
How is this different from the $7,500 EV tax credit?
The EV tax credit (30D) is a one-time credit on new EV purchases with battery sourcing rules. The loan interest deduction is an annual above-the-line deduction on interest you pay each year through 2028 — they can stack when both qualify.
Which EVs are US-assembled?
The list shifts with factory changes — Tesla Model 3/Model Y, Ford Mustang Mach-E (Mexico plant vehicles do not count), and various GM models have qualified at different times. The authoritative source is the finalized Treasury vehicle list; check your VIN's assembly country before claiming.
Is there an income limit?
Yes — MAGI under $100,000 (single) / $200,000 (MFJ), phasing out. Above that, the deduction shrinks and disappears. Retirees and higher earners buying EVs often miss this deduction entirely.
How much does a typical EV loan save?
A $40,000 EV loan at 7% generates roughly $2,700 of interest in year one, declining each year. In the 22% bracket, that is about $594 back in year one — real money every year you carry the loan.