Car loan interest deduction: rules and examples
From 2025 to 2028 you can deduct up to $10,000 a year of interest on a loan for a new, US-assembled car, SUV, van, pickup or motorcycle bought for personal use.
By the Sproutcalc team · Figures last checked · How we calculate
Short answer: new vehicle, final assembly in the US, loan taken out after 31 December 2024, personal use. Above $100,000 of income ($200,000 joint), the deduction drops by $200 for each $1,000 or part of $1,000 over.
Was your car built in the US?
Check the final assembly plant from your VIN.
Checklist
| Rule | Qualifies | Doesn't qualify |
|---|---|---|
| Vehicle | Car, minivan, van, SUV, pickup or motorcycle under 14,000 lbs GVWR | Heavier vehicles |
| New or used | New, with you as the first user | Used vehicles |
| Where built | Final assembly in the United States | Assembled elsewhere |
| Loan date | Taken out after 31 December 2024, secured by a lien on the vehicle | Older loans, leases |
| Use | Personal | Business vehicles |
| Refinancing | Interest on a refinanced qualifying loan generally still counts |
Where to check your car
Worked example
You're single, paid $2,400 of interest and have $105,200 of modified AGI. That's $5,200 over the threshold, which counts as 6 portions of $1,000. The deduction falls by 6 × $200 = $1,200, leaving $1,200.
How to claim it
On Schedule 1-A, Part IV. You must enter the vehicle's VIN on your return. Your lender reports the interest to you if it's $600 or more.
Questions people ask
Where do I find where my car was built?
On the window sticker, or from the VIN. The IRS also lets buyers rely on the final assembly point shown on the vehicle's label.
Does it work with the standard deduction?
Yes. You don't need to itemize.