Car Loan Interest Deduction Calculator

Enter your filing status, modified AGI, and the interest you paid on a qualifying vehicle loan to estimate the federal deduction for qualified passenger vehicle loan interest — up to $10,000 per return for tax years 2025 through 2028 — and the tax it saves at your marginal rate.

To see what the deduction does to your refund with your wages, withholding and credits, use the tax refund calculator.

This calculator is for informational purposes only. Results are estimates based on the inputs you enter and the rules summarized below; your actual deduction is determined on IRS Schedule 1-A when you file.

What you need before you start

Gather three documents. The calculator's answers are only as good as these numbers.

1. Your lender's interest figure for the year. For 2025 interest, lenders could provide this through an online portal or year-end statement under IRS Notice 2025-57. For 2026 interest onward, lenders that receive at least $600 on the loan send Form 1098-VLI; box 1 is the number you want.
2. Your modified AGI. For most people this is simply the AGI on Form 1040 line 11. Add back any foreign earned income exclusion or Puerto Rico income exclusion. If you are unsure, the MAGI calculator walks through it.
3. Your retail installment contract and window sticker. These confirm the loan date, the first lien, the vehicle's GVWR, and the final assembly point.

How each input is used

A "No" on any eligibility question sets the deduction to zero and shows the reason.

How the math works

The official computation is on Schedule 1-A, Part IV, lines 23 to 30:

1. Add qualified interest for up to two vehicles (line 23).
2. Take the smaller of that total or $10,000 (line 24).
3. Subtract $100,000 ($200,000 if married filing jointly) from MAGI (lines 25–27).
4. Divide the excess by $1,000 and round up to the next whole number (line 28).
5. Multiply by $200 (line 29).
6. Subtract from the capped interest; if the result is below zero, the deduction is zero (line 30).

Your tax saving is roughly the deduction times your marginal rate. If your MAGI is above the threshold and the estimate above differs from what you get by working these six steps by hand, use the Schedule 1-A figure — that is the number that goes on your return.

Phase-out examples (single filer)

The $124,200 row reproduces the example in the Treasury regulations, which reduced a $7,000 deduction by $5,000 at the same income.

Estimating interest if you do not have a statement yet

If you are shopping and want to know what a loan would be worth, estimate the first year's interest from an amortization schedule. The figures below assume 12 full monthly payments starting at the beginning of the year; a loan that starts mid-year will show less interest in year one. You can generate your own schedule with the amortized loan calculator.

Even a $70,000 loan at 8% produces well under $10,000 of interest in year one, so for most single-vehicle households the cap is not the binding limit — the phase-out is.

Worked examples by vehicle type

Each example uses a 2026 marginal rate from the IRS bracket table applied to taxable income after the standard deduction (22% covers single taxable income from $50,400 to $105,700 and joint taxable income from $100,800 to $211,400). Dollar amounts are illustrations, not quotes for any specific model.

Car

You finance a new sedan whose window sticker lists a US final assembly point: $38,000 over 60 months at 6.5%. First-year interest is about $2,274. With MAGI of $72,000 you are under the threshold, so the deduction is $2,274 and the saving at 22% is about $500. Enter "Car / sedan," $72,000, and $2,274. If the same sedan had been assembled in Mexico, the US assembly answer would be "No" and the result would be $0.

SUV or crossover

A three-row SUV financed at $52,000 over 84 months at 6.9% generates about $3,401 in year one. A married couple with $185,000 of MAGI files jointly; they are below $200,000, so the full $3,401 is deductible and at 22% saves about $748. Before entering "Yes" for assembly, decode the actual VIN — some compact and midsize SUVs come from US and non-US plants under the same name.

Minivan

A $45,000 minivan over 72 months at 7% yields about $2,952 of first-year interest. A head-of-household parent with $104,500 of MAGI uses the $100,000 threshold: excess $4,500 rounds up to 5, so the reduction is $1,000 and the deduction is $1,952, saving about $429 at 22%. Head of household does not get a higher threshold for this deduction.

Van

A camper-converted full-size van financed at $60,000 over 72 months at 7.5% produces about $4,221. It qualifies only if you expected mainly personal use when you signed and its GVWR is under 14,000 lb. A single filer with $90,000 of MAGI deducts the full $4,221 and saves about $929. If the van was bought mostly for a delivery or trades business, answer "No" to personal use; the interest belongs on Schedule C instead.

Pickup truck

A heavy-duty pickup financed at $70,000 over 84 months at 8% produces about $5,319 in year one. Check the door-jamb label: if the GVWR is 14,000 lb or more, answer "No" to the weight question. A joint couple with MAGI of $210,500 is $10,500 over the joint threshold; that rounds up to 11, a $2,200 reduction, leaving a $3,119 deduction worth about $686 at 22%.

Motorcycle

A new US-built touring motorcycle financed at $18,000 over 60 months at 9% generates about $1,499. A single rider with $101,200 of MAGI is $1,200 over the threshold, which rounds up to 2, a $400 reduction, for a $1,099 deduction worth about $242 at 22% (after the $16,100 standard deduction, taxable income of roughly $85,100 is still in the 22% bracket). Off-road-only bikes and ATVs do not qualify, so do not use the calculator for them.

How to read your result

• Your deduction is the amount that will appear on Schedule 1-A line 30 if every eligibility answer is correct.
• Tax savings is an approximation. If the deduction pulls part of your income into a lower bracket, the true saving is slightly less than the marginal-rate estimate.
• A zero result means one eligibility answer was "No" or your MAGI is high enough to wipe out your interest.

Mistakes the calculator cannot catch

• Negative equity or cash-out refinancing. Only the share of interest on the qualifying loan amount counts. If $2,000 of a $42,000 loan was rolled-in negative equity, enter about 95% of the lender's interest figure.
• Two cars on one return. Add the interest together, but the total deduction cannot exceed $10,000.
• Business interest already deducted. If you deducted part of the interest on Schedule C, E, or F, enter only the remainder.

The full eligibility rules for every vehicle type are in the car loan interest deduction guide, and the VIN and window-sticker checks are explained step by step in the US-assembled car loan tax deduction guide. To combine this deduction with tips, overtime, and the senior deduction, use the Working Families Tax Cuts savings estimator.