Car loan interest deduction checklist (2025–2028)

Print or save this page. It is a checklist, not a determination that any loan is deductible.

Source: IRS Working Families Tax Cuts — “No Tax on Car Loan Interest”.

Years and cap

• Tax years 2025 through 2028
• Maximum annual deduction $10,000 of qualified interest
• Phases out when MAGI is over $100,000 (single) or $200,000 (joint)

Loan gates the IRS lists

• Loan originated after December 31, 2024
• Used to purchase a vehicle (not a lease — lease payments do not qualify)
• Original use starts with the taxpayer (used vehicles do not qualify — used-car guide)
• Personal use, not business or commercial use
• Secured by a lien on the vehicle

The IRS also notes that if a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible. Confirm that with a preparer. This site does not score refinances.

Vehicle gates the IRS lists

• Car, minivan, van, SUV, pick-up truck, or motorcycle
• GVWR less than 14,000 pounds
• Final assembly in the United States

Check assembly with the free VIN checker on this page. AssemblyAlert passes US assembly only on `PlantCountry === UNITED STATES (USA)`. The report also flags VIN model year as a new-vehicle signal: used vehicles do not qualify, and an older model year is usually not a new purchase. VIN year is not proof of first owner. There is no IRS purchase-price / MSRP cap — MSRP guide.

Return and reporting

• Include the VIN on the return for any year the deduction is claimed — where it goes
• Lenders must file information returns and furnish statements of interest received
• Many filers will see Form 1098-VLI around January 2027 for 2026+ reporting — what 1098-VLI is and when you get it
• Available with the standard or itemized deduction, per the IRS page

Tools

• Interest / cap estimator
• Lease vs buy
• Fact cards

Not tax advice. Not affiliated with the IRS or NHTSA. Owned by Record of Sale, LLC.