First Car Loan Interest Deduction Calculator
For the first loan of your life, now with a tax perk.
The short answer: At the numbers below, the deduction is $1,800 — $216 back at 12% ($8 per paycheck).
New, US-assembled vehicle only
Modified Adjusted Gross Income
Car Loan Interest Deduction
$1,800
✅ 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.
Your First Form 1098-Adjacent Perk
First-time buyers usually take thin loans — but every dollar of interest is now deductible.
- • Keep your monthly loan statements; interest paid is on each one
- • Cap and phase-out won't touch starter loans
- • If a parent cosigns, the payer deducts
Worked Example
Single first-time buyer, $1,800 of interest.
- • Deduction $1,800; $216 at a low 12% bracket — modest but free
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Frequently Asked Questions
Can first-time buyers deduct car loan interest?
Yes — there's no experience requirement. Interest up to $10,000 is deductible under the OBBBA.
My parents cosigned. Who deducts?
Whoever is legally liable and actually pays the interest — usually the primary borrower.