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Schedule 1-A car loan interest
What the new deduction for car loan interest is worth: up to $10,000 a year on a loan for a new U.S.-assembled vehicle bought after 2024, phasing out above $100,000 of income.
Your numbers
Up to $10,000 of interest on a new U.S.-assembled vehicleTax year 2026 · IRS Schedule 1-A · 2025–2028
Federal income tax saved
$528On a $2,400 deduction, at a top federal rate of 22%Method schedule-1a-v1.0.0Data us-tax-2026-v1, irs-schedule-1a-2026
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Guide
For 2025 through 2028, you can deduct up to $10,000 a year of interest on a loan for a new vehicle with final assembly in the United States, bought for personal use. Before this, car loan interest on a personal vehicle was never deductible.
A new car, SUV, minivan, van, pickup or motorcycle under 14,000 pounds gross vehicle weight, whose original use starts with you, assembled in the U.S., and bought with a loan taken out after December 31, 2024 and secured by the vehicle. Used vehicles, leases, and vehicles for business use do not qualify.
Final assembly location is printed on the window sticker, and the VIN decoder on NHTSA's site reports the plant. You enter the VIN on your return.
Up to $10,000 of interest a year. Above $100,000 of income ($200,000 joint), the cap drops $200 for every $1,000, or part of $1,000, over. It is gone at $149,001 single and $249,001 joint.
On a $40,000 five-year loan at 7%, first-year interest is about $2,580. In the 22% bracket that saves about $570; in the 12% bracket about $310. The deduction is taken whether or not you itemize.
No. The vehicle's original use has to start with you, so used vehicles do not qualify.
No. Only interest on a loan secured by a vehicle you buy qualifies.
The final assembly location is on the window sticker (Monroney label), and NHTSA's free VIN decoder shows the plant for your specific vehicle.
Lenders report qualifying interest on Form 1098-VLI. Until you have it, your loan statements show interest paid so far.
No. It is claimed on Schedule 1-A whether you itemize or not.
Check final assembly before you buy if the deduction matters to your budget; the same model can be built in more than one country.
The deduction is largest in the early years of a loan, when most of each payment is interest.
The deduction covers 2025 through 2028 only.
Federal income tax only. This is an estimate, not tax advice.
Results are for information. They are not legal, tax, medical, or financial advice. How the math is maintained · Report a wrong figure.
What the calculation includes, what it leaves out, and how it rounds.
Calculation receipt
This answer is built from published figures. Each one is named below, with the release it came from.
If a source above is unavailable or out of date: The deduction caps and income limits are set by the 2025 tax law and printed on Schedule 1-A; the tax saved needs the 2026 brackets. Without either, the page has no honest number to give.
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