Car Lease Money Factor Tax Calculator (OBBBA)
Enter the interest figure from your annual loan statement. The estimate applies the same Schedule 1-A math as your federal return — no tax software, no signup.
The short answer: Nora — at the scenario numbers pre-loaded below, the OBBBA deduction is $0, worth about $0 in federal income tax at a 22% marginal rate ($0 per biweekly paycheck). Exact figures update live as you change the inputs.
New, US-assembled vehicle only
Modified Adjusted Gross Income
Car Loan Interest Deduction
$0
⚠ No car loan interest entered
⚠️ 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.
Qualification Rules That Decide It
Straight answer: the deduction is written for interest on vehicle loans, and lease charges — the money factor — are not loan interest, so leases do not qualify as written. This page exists because the question is asked constantly and deserves a real answer, not a sales pitch. If the lease math otherwise works for you, the lost deduction is small; if you were deciding between lease and loan, the deduction tilts slightly toward financing.
The full rules, caps and phase-outs for every deduction are in one table on the OBBBA rules page.
Worked Example
Nora leases a US-built SUV and pays about $2,000 a year embedded in the money factor.
- • Deductible amount: $0
- • Federal income tax savings: $0 (at the 22% marginal rate)
- • Per biweekly paycheck: $0
That repeats every year of the loan — interest deducts annually, which is why the loan-vs-lease math changed under OBBBA.
Keep Reading
Frequently Asked Questions
Is lease money factor deductible under OBBBA?
No. The deduction covers interest on a loan secured by the vehicle. Lease payments, including the embedded money factor charge, are not loan interest and do not qualify.
Do I need to itemize deductions to claim the car loan interest deduction?
No. Like the other OBBBA deductions, vehicle loan interest is an above-the-line adjustment on Schedule 1-A — it stacks on top of the standard deduction.