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Tax year 2026 · filed in 2027

Car loan interest deduction

Interest on a new, US-assembled vehicle is deductible if all six tests pass. Check yours, and work the interest out from your loan.

Deduct up to $10,000Phases out above $100,000Tax years 2025–2028

Figures verified September 8, 2026Source: Schedule 1-A Part IV

Step 1 — Does the vehicle and loan qualify?

Was the vehicle new when you bought it?

Its original use has to start with you. A used or certified pre-owned vehicle does not qualify.

Did its final assembly take place in the United States?

The window sticker lists the final assembly point. The brand’s home country does not matter.

Did you buy it for personal use?

Not as a business or fleet vehicle. Interest you deduct as a business expense cannot also be claimed here.

Is the loan secured by a first lien on the vehicle?

An ordinary auto loan is. A lease, a personal loan or a credit-card purchase is not.

Did you take out the loan after December 31, 2024?

Interest on a loan from 2024 or earlier does not qualify, even if you pay it in a later year.

Is it a car, minivan, van, SUV, pickup or motorcycle under 14,000 lb?

Measured by gross vehicle weight rating, which is on the sticker inside the driver’s door.

Step 2 — Your interest and income

Interest only, not the whole payment. Your lender's year-end statement shows it. With two qualifying vehicles, add both loans together.

Used the vehicle partly for business?

The same interest cannot be deducted twice, so the form takes this part out before the cap.

OBBBA Deductions · obbbadeductions.com

Car loan interest worksheet — tax year 2026

Single

The six tests, as answered

  • Was the vehicle new when you bought it? not answered
  • Did its final assembly take place in the United States? not answered
  • Did you buy it for personal use? not answered
  • Is the loan secured by a first lien on the vehicle? not answered
  • Did you take out the loan after December 31, 2024? not answered
  • Is it a car, minivan, van, SUV, pickup or motorcycle under 14,000 lb? not answered

Car loan interest deduction

Answer the 6 remaining questions in step 1.

Educational estimate only, not tax advice. It runs entirely in your browser and nothing you type is sent anywhere. The deduction is scheduled to expire after tax year 2028.

Estimate only, not tax advice. This site is general information, not tax advice. Figures are estimates and may not reflect the final IRS guidance for the tax year. Confirm your situation with a qualified tax professional or the IRS before filing.

IRC § 163(h)(4) and Schedule 1-A Part IV. Figures on this site were last checked September 8, 2026. Produced by obbbadeductions.com — nothing entered into the calculator left the browser it was typed into.

The six tests

Every one has to be true. One “no” and none of the interest qualifies.

  1. Was the vehicle new when you bought it?Its original use has to start with you. A used or certified pre-owned vehicle does not qualify.
  2. Did its final assembly take place in the United States?The window sticker lists the final assembly point. The brand’s home country does not matter.
  3. Did you buy it for personal use?Not as a business or fleet vehicle. Interest you deduct as a business expense cannot also be claimed here.
  4. Is the loan secured by a first lien on the vehicle?An ordinary auto loan is. A lease, a personal loan or a credit-card purchase is not.
  5. Did you take out the loan after December 31, 2024?Interest on a loan from 2024 or earlier does not qualify, even if you pay it in a later year.
  6. Is it a car, minivan, van, SUV, pickup or motorcycle under 14,000 lb?Measured by gross vehicle weight rating, which is on the sticker inside the driver’s door.

How the amount is worked out

  1. Add up the interest paid on up to two qualifying loans, less any you deducted as a business expense.
  2. Cap it at $10,000.
  3. Subtract $100,000 from your modified adjusted gross income ($200,000 if married filing jointly). Divide what is left by $1,000 and round up to a whole number.
  4. Multiply by $200 and take it from the capped interest. It cannot go below zero.

So the full $10,000 is gone once income passes $149,000 single, or $249,000 on a joint return.

A worked example

A single filer financed $38,000 for a new US-built pickup in March 2025, at 7.5% over 72 months. Their modified adjusted gross income for 2026 is $104,300.

Worked example, line by line
Interest paid in 202612 payments of $657.02$2,338.30
Income over $100,000: $4,300 → 5 steps− $1,000.00
Deductible$1,338.30
Estimated federal tax savedWorked through the 2026 brackets, assuming the standard deduction.$294.43

$4,300 is 4 whole steps and a part of one. The part counts, so it is 5 steps — rounding down would have left an extra $200 of deduction that the form does not allow.

Questions

Which car loans qualify?
A loan taken out after December 31, 2024 to buy a new car, minivan, van, SUV, pickup or motorcycle for personal use, secured by a first lien on the vehicle. The vehicle's final assembly has to be in the United States and its gross vehicle weight rating under 14,000 pounds.
How much can I deduct?
Up to $10,000 of interest a year, whatever your filing status. Above $100,000 of modified adjusted gross income ($200,000 on a joint return) it drops by $200 for every $1,000 — or part of $1,000 — over the line.
Why does $1 over the threshold cost me $200?
Because this part of Schedule 1-A rounds up: any part of a $1,000 step counts as a whole step. The tips and overtime parts of the same form round down, so it is easy to assume this one does too. It does not.
Does a used car qualify?
No. The original use of the vehicle has to begin with you, so used and certified pre-owned vehicles are out, however new the loan.
How do I know where my car was assembled?
The window sticker on a new vehicle lists its final assembly point. The brand does not matter — a foreign brand built in a US plant can qualify, and a US brand built abroad cannot.
Does a lease count?
No. Lease payments are not loan interest, and the deduction needs a loan secured by the vehicle.
I refinanced. Does the new loan count?
Refinancing raises its own questions — including when the original loan was taken out and whether the balance grew. Check with a tax professional before claiming interest on a refinanced loan.
Do I have to itemize?
No. It is claimed on Schedule 1-A, whether you take the standard deduction or itemize. You will need each vehicle’s VIN for the form.
Can I claim it if we file separately?
Yes, as the form stands. Unlike the tips, overtime and senior parts, the car loan part of Schedule 1-A does not require a married couple to file jointly, and a separate return uses the same cap and threshold as a single filer.
Does my data go anywhere?
No. The checker and the loan calculator run in your browser. Nothing you type is sent to a server, stored, or logged.
How long does it last?
It is scheduled to expire after tax year 2028. It first applied to 2025 returns.

The other Schedule 1-A deductions

All four are claimed on the same form, and qualifying for one says nothing about the others. Each check takes a minute.

Sources