Car loan interest deduction calculator
Personal car loan interest is deductible again, up to $10,000 a year through 2028, if the vehicle and loan pass every test. Check yours and see the year-by-year figures. It’s an estimate from your numbers, not advice; Krystal checks the real picture on a call.
The deduction phases out from $100,000 ($200,000 married filing jointly).
Deductible interest, 2025–2028
Schedule 1-A$6,179
About $1,359 in federal tax savings at your 22% rate.
Year by year
Payment $767 a monthDeductible interest by year
$6,179
2026: $1,032
| Label | Value |
|---|---|
| 2026 | $1,032 |
| 2027 | $2,805 |
| 2028 | $2,342 |
| Year | Interest paid | Deductible |
|---|---|---|
| 2026 | $1,032 | $1,032 |
| 2027 | $2,805 | $2,805 |
| 2028 | $2,342 | $2,342 |
| Total | $6,179 | $6,179 |
$4,060 of interest falls after 2028, when the deduction ends under current law.
Claimed on Schedule 1-A alongside the standard deduction; you don’t need to itemize. Keep the VIN and watch for Form 1098-VLI from your lender. Savings use 2026 brackets. The deduction lowers the cost of borrowing; it doesn’t make the interest free. An estimate for education, not tax advice.
Method
How the estimate works.
What the calculator does
It amortizes your loan month by month from the first payment, adds up the interest paid in each calendar year from 2025 to 2028, and applies two limits:
- A cap of $10,000 of deductible interest a year
- A phaseout of $200 for each $1,000 of income over $100,000 ($200,000 married filing jointly)
The tax savings are the deductible interest times your marginal rate, using 2026 brackets.
Eligibility
The vehicle and loan have to pass every requirement in the checklist. If any box is unticked, the calculator shows which requirement failed and doesn’t estimate a deduction.
Business use
If you use the vehicle in your business, the business vehicle deduction usually beats this one. Compare it with the vehicle deduction calculator.
FAQ
Car loan interest questions.
Which vehicles qualify for the car loan interest deduction?
New cars, minivans, vans, SUVs, pickups, and motorcycles under 14,000 lbs GVWR, purchased for personal use, with final assembly in the United States. Used and certified pre-owned vehicles do not qualify, and neither do leases. Brand nationality is irrelevant — a Toyota Tundra built in San Antonio qualifies while some "American" models assembled in Mexico or Canada do not. Check the vehicle information label on the driver's side door jamb.
How much car loan interest can I deduct?
Up to $10,000 of interest per year for tax years 2025 through 2028. The deduction phases out by $200 for every $1,000 of modified AGI above $100,000 (single) or $200,000 (married filing jointly) — fully gone at $150,000 / $250,000.
Do I need to itemize to claim it?
No. The deduction is claimed on Schedule 1-A on top of the standard deduction. You will need the vehicle's VIN on your return, and starting with tax year 2026 your lender sends Form 1098-VLI showing the interest you paid.
Does refinancing kill the deduction?
No — refinancing a qualifying loan keeps the deduction, but only up to the remaining principal of the original loan. Cash-out amounts beyond that balance do not generate deductible interest.
What if I use the car partly for business?
This deduction is for personal-use vehicles. If you use a vehicle in your business, the business deduction (standard mileage or actual expenses) is usually worth far more — but you cannot claim both on the same use. Run our Vehicle Deduction calculator to compare.
When does this deduction end?
After tax year 2028, unless Congress extends it. Interest paid in 2029 and later is not deductible under current law, even on a loan that qualified earlier.
Keep reading
Related.
Vehicle deduction calculator
Standard mileage, actual expenses and Section 179 for a business vehicle.
Car loan interest is deductible again
Which vehicles qualify for the new car loan interest deduction.
2026 tax changes: what DFW taxpayers need to know
The changes that affect this year’s return.
No tax on tips (and overtime)
How the new tip and overtime deductions work.
Start with fifteen minutes.
Krystal calls you to see whether LeCPA fits what you’re building.