Car Loan Interest Deduction Calculator (US)

About the Car Loan Interest Deduction Calculator (US)

Work out the US federal deduction for car loan interest (section 163(h)(4), added by the One Big Beautiful Bill Act): for tax years 2025 through 2028, interest on a loan taken out after 2024 to buy a new vehicle assembled in the United States for personal use is deductible, up to $10,000 a year — whether you take the standard deduction or itemize. Above $100,000 of modified AGI ($200,000 on a joint return) it falls by $200 for each $1,000 or part of $1,000.

Enter your modified AGI and, for each vehicle, the interest from your lender’s statement and any part deducted as a business expense; confirm the tests the loan and vehicle must meet (new, US final assembly, a car, minivan, van, SUV, pickup or motorcycle under 14,000 pounds, a first lien, more than half personal use, not a lease). The calculator follows Schedule 1-A, Part IV, line by line, checks the VIN you will need on the return, and works out the federal income tax the deduction saves. Nothing you type leaves your browser.

Without a pass the page gives a free preview of your own result: the deduction in full, with the first rows of the table; a Pro pass opens the tax saved, every line, the working, the copy, the CSV and printing.

Which loans and vehicles qualify

Interest counts when it is paid or accrued on a loan that you took out after December 31, 2024 to buy an applicable passenger vehicle for personal use, secured by a first lien on it. The vehicle must be new (its original use starts with you), made mainly for public roads, with at least two wheels, a car, minivan, van, SUV, pickup truck or motorcycle with a gross vehicle weight rating under 14,000 pounds, and its final assembly must have been in the United States — shown on the vehicle information label at the dealer, or by the plant of manufacture in the VIN ([NHTSA VIN Decoder]([object Object])). Personal use means you expected more than half personal use when you took out the loan. Lease payments, loans from related people, fleet loans, commercial vehicles not used personally, salvage titles and vehicles for scrap or parts are excluded ([Public Law 119-21, section 70203]([object Object]); [Instructions for Form 1040]([object Object])).

The loan amount can include what is customarily financed with the car — service plans, extended warranties, sales tax, vehicle fees — but not insurance, a trailer or negative equity from a trade-in. A refinanced loan keeps qualifying, up to the balance refinanced, if the new loan is secured by a first lien on the same vehicle.

How the deduction is worked out (Schedule 1-A, Part IV)

• Line 23: the qualified interest of every vehicle, less any part deducted on Schedule C, E or F.
• Line 24: at most $10,000 — for the whole return, joint returns included.
• Lines 25–29: modified AGI less $100,000 ($200,000 married filing jointly); divided by $1,000 and rounded up; times $200.
• Line 30: line 24 less line 29, not below zero: your deduction, entered on Form 1040 line 13b. It lowers taxable income, not AGI.

The full $10,000 is gone once modified AGI is above $149,000 ($249,000 joint). Every return that claims it must show each vehicle’s VIN ([Schedule 1-A]([object Object])).

Official sources

• [Public Law 119-21 (One Big Beautiful Bill Act)]([object Object]) — section 70203, section 163(h)(4) of the Internal Revenue Code
• [IRS Schedule 1-A (Form 1040)]([object Object]) — Part IV
• [IRS Instructions for Form 1040]([object Object]) — Schedule 1-A, Part IV
• [IRS: provisions for individuals and workers]([object Object]) and [guidance on the new deduction]([object Object])
• [IRS Rev. Proc. 2024-40]([object Object]) and [Rev. Proc. 2025-32]([object Object]) — the tax rate tables used for the tax saved

Limitations

• The tax saved is federal income tax only, from the 2025 or 2026 rate tables (or your top rate for 2027 and 2028); state income tax and credits that depend on taxable income are not included.
• Whether a vehicle’s final assembly was in the United States, and whether use is personal, is for you to confirm: the calculator takes your answers to the tests.
• For a refinanced loan that borrowed more than the old balance, enter only the interest on the part up to the old balance.
• An estimate, not tax advice; the IRS’s final regulations on this deduction may add detail.

Privacy

On this device: nothing is sent

Everything happens in your browser. What you enter or open here is not uploaded or stored by MySmartCoPilot.