The 2026 car loan interest deduction: deduct up to 10,000 dollars
Reviewed by our office. Updated July 2026.
If you bought a new vehicle with a loan, the 2026 law lets you deduct the interest you pay, up to 10,000 dollars a year. Here is who qualifies and how to claim it.
Who qualifies for the car loan interest deduction?
The interest has to be on a loan used to buy a qualifying vehicle for personal use. The vehicle must be new (its first use starts with you, so used vehicles do not qualify), the loan must be secured by a lien on the vehicle, and the vehicle must have had its final assembly in the United States. Qualifying types are a car, minivan, van, SUV, pickup truck, or motorcycle with a gross vehicle weight rating under 14,000 pounds. The benefit applies to tax years 2025 through 2028. Source: IRS guidance on the car loan interest deduction.
How much can you deduct?
You can deduct up to 10,000 dollars of qualifying car loan interest per year. It is available whether you take the standard deduction or itemize, and it is claimed on the new Schedule 1-A. Source: IRS One Big Beautiful Bill provisions.
What income limits apply?
The deduction is reduced once modified adjusted gross income passes 100,000 dollars for single filers and 200,000 dollars for joint filers. Below those thresholds most buyers get the full benefit. Source: IRS guidance on the car loan interest deduction.
How Zero Fuss Taxes handles it
We confirm the vehicle and loan qualify (final assembly, new vehicle, personal use, and a lien on the vehicle), add up your deductible interest for the year, and file it on the new Schedule 1-A. One written quote first, no refund-based fees, and a real preparer signs your return.
Estimate your car loan interest savings
A planning estimate, not tax advice. Your preparer confirms the exact figure.
Estimated 2026 tax savings
$0
Common questions
What is the new car loan interest deduction?
It lets you deduct the interest on a loan used to buy a qualifying new vehicle, up to 10,000 dollars a year, for tax years 2025 through 2028. It is claimed on the new Schedule 1-A.
Which vehicles and loans qualify?
The vehicle must be new (its first use starts with you), bought for personal use, and assembled in the United States, and it must be a car, minivan, van, SUV, pickup truck, or motorcycle under 14,000 pounds. The loan must be secured by a lien on the vehicle. Used vehicles and leases do not qualify.
Do I have to itemize to claim it?
No. The deduction is available whether you take the standard deduction or itemize, and it is reported on the new Schedule 1-A.
Is the deduction reduced at higher incomes?
Yes. It is reduced once modified adjusted gross income passes 100,000 dollars for single filers and 200,000 dollars for joint filers.
How does Zero Fuss Taxes help me claim it?
We confirm the vehicle and loan qualify, total your deductible interest, and file it on Schedule 1-A. You get one written quote first and a real preparer who signs your return.