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Car Loan Interest Deduction Calculator (2025–2028)

Estimate the federal deduction for interest on a qualifying new-vehicle loan under the One Big Beautiful Bill Act — using official IRS rules.

Updated for tax year 2025Verified against IRS primary sourcesFree · no sign-up

Estimate your car loan interest deduction

Source: IRS Schedule 1-A, Part IV
$
Interest on a loan for a new, U.S.-assembled personal vehicle, originated after Dec 31 2024.
$
Estimated federal tax savings
–
Deduction: –
Interest paid (max $10,000)–
Phase-out reduction–
Your estimated deduction–

How the car loan interest deduction works

For tax years 2025 through 2028, you can deduct up to $10,000 of interest per year on a loan for a qualifying new personal vehicle — available whether or not you itemize. The loan must be originated after December 31, 2024 and be secured by a first lien on the vehicle.

Vehicle must qualifyNew only (not used), final assembly in the United States, gross vehicle weight under 14,000 lbs, for personal use. Leases do not qualify. You verify U.S. assembly via the VIN.
Example. A single filer with $130,000 MAGI paid $8,500 interest on a new U.S.-assembled truck loan. Phase-out reduces it by $6,000, leaving a $2,500 deduction.

Income limits and phase-out

The deduction phases out above $100,000 MAGI ($200,000 joint), reduced by $200 for each $1,000 (rounded up) of MAGI over the threshold — reaching zero at $150,000 ($250,000 joint).

How this calculator works

The tool caps entered interest at $10,000, then subtracts the phase-out: excess MAGI over $100,000 / $200,000 divided by $1,000 and rounded UP (per IRS Schedule 1-A, Part IV, line 28), times $200. The result times your bracket estimates federal tax saved. Detailed regulations were proposed in Jan 2026 and may change.

Sources
  1. IRS — OBBBA deductions overview (FS-2025-03)
  2. IRS — Guidance on the car loan interest deduction (IR-2025-129)
Disclaimer. This calculator provides simplified estimates of federal tax only and is not tax, legal, or financial advice. Figures are based on IRS guidance as of July 2026 and may change; some 2026 rules are from proposed regulations. Consult a qualified tax professional for your situation.