Ginti US

Car Loan Interest Deduction Calculator

Enter your loan and income to see the interest you'll pay in the first year, the deduction and the federal tax it saves.

Filing status

Modified adjusted gross income ($)

Loan amount ($)

Interest rate (%)

Loan term (years)

Federal income tax saved in the first year

$497

Deduction of $2,258 on $2,258 of interest

Interest in year one: $2,258
Deduction: $2,258
Cap: $10,000 a year
Phase-out starts: $100,000

Only loans taken out after 31 December 2024 for a new car, SUV, van, pickup or motorcycle, for personal use, whose final assembly was in the United States, qualify. Used vehicles and leases don't. You'll need the vehicle identification number on Schedule 1-A.

What you entered

Loan: $35,000Rate: 7%Term: 5 yearsMAGI: $85,000

1
Interest on the car loan this year, up to the $10,000 cap
smaller of $2,258 and $10,000= $2,258
2
Deduction
$2,258= $2,258
3
Federal income tax saved (standard deduction taken too)
tax on $68,900 − tax on $66,642= $497

Result

Tax saved: $497

Interest for the first twelve monthly payments of a standard loan; later years have less interest, so the deduction shrinks. The phase-out follows Schedule 1-A: $200 off for each $1,000, or part of $1,000, of MAGI over the threshold. The deduction runs for 2025 to 2028.

The most car-loan interest you can deduct, by income

With $10,000 or more of qualifying interest, the deduction falls by $200 for each $1,000, or part of $1,000, of modified AGI above $100,000 (single) or $200,000 (joint).

MAGI (single)	MAGI (joint)	Most you can deduct
$100,000	$200,000	$10,000
$110,000	$210,000	$8,000
$125,000	$225,000	$5,000
$140,000	$240,000	$2,000
$150,000	$250,000	$0

Most loans have less than $10,000 of interest a year: a $35,000 loan at 7% over five years has about $2,258 in its first year. With less interest than the limit, the reduction comes off your actual interest. Only loans after 2024 for new, US-assembled vehicles for personal use qualify.

Which car loans qualify

The deduction covers interest on a loan taken out after 31 December 2024 to buy a new car, minivan, van, SUV, pickup or motorcycle for personal use, whose final assembly took place in the United States. Used vehicles, leases and business vehicles don't qualify. You can deduct up to $10,000 of interest a year for 2025 to 2028, on Schedule 1-A, whether or not you itemize, and you'll need the vehicle identification number.

How the phase-out works

The deduction falls by $200 for each $1,000, or part of $1,000, of modified AGI above $100,000 ($200,000 joint), so it is gone $50,000 above the threshold. A single filer with $104,500 of MAGI and $2,400 of interest loses $1,000 and deducts $1,400, saving about $308 at 22%. A $35,000 loan at 7% over five years has about $2,258 of interest in its first year, and less each year after.

Frequently asked questions

Can I deduct car loan interest on my 2026 taxes?

Yes, if the loan was taken out after 31 December 2024 for a new vehicle assembled in the United States, bought for personal use. Up to $10,000 of interest a year is deductible for 2025 to 2028, less the phase-out above $100,000 of modified AGI ($200,000 joint).

Do used cars or leases qualify?

No. Only new vehicles qualify, the original use has to start with you, and lease payments don't count. Final assembly has to be in the United States; the vehicle's information label or the VIN decoder from NHTSA shows the assembly plant.

How much will the car loan deduction save me?

The deductible interest times your tax rate. $2,400 of interest saves about $528 for a single filer in the 22% bracket. The saving falls each year as the loan's interest falls.