Car Loan Refinance Tax Deduction Calculator
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: Trevor — at the scenario numbers pre-loaded below, the OBBBA deduction is $1,200, worth about $264 in federal income tax at a 22% marginal rate ($10 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
$1,200
✅ 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.
Qualification Rules That Decide It
Refinancing creates a new loan, and the question is when the original qualified. A post-enactment original loan refinanced post-enactment stays vehicle-secured and deductible; a pre-enactment loan refinanced now is a new loan that can qualify going forward. Rate drops shrink interest, which shrinks the deduction — but paying less interest to the bank is still the better deal every time.
The full rules, caps and phase-outs for every deduction are in one table on the OBBBA rules page.
Worked Example
Trevor refinanced his truck loan to a lower rate, paying about $1,200 a year in interest now.
- • Deductible amount: $1,200
- • Federal income tax savings: $264 (at the 22% marginal rate)
- • Per biweekly paycheck: $10
That repeats every year of the loan — interest deducts annually, which is why the loan-vs-lease math changed under OBBBA.
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Frequently Asked Questions
If I refinance, do I keep the interest deduction?
A refinance signed after enactment on a qualifying vehicle creates a deductible loan going forward, since it is still secured by the vehicle. Interest on the old pre-enactment loan was never deductible in the first place.
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.