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Auto loan interest deduction calculator (2026): no tax on car loan interest

Enter your filing status, income (MAGI), and the qualified passenger vehicle loan interest you paid, and confirm your vehicle and loan meet the eligibility rules. See your deduction for 2025–2028 under the new federal deduction — before the income phase-out and after it.

✓ Checked26 U.S.C. §163(h)(4) and the 2025 Schedule 1-A worksheet, Part IV
Auto loan interest deduction–
Interest paid (capped at $10,000)
MAGI phase-out threshold
Reduction applied (per $1,000 of MAGI over the threshold, rounded up)
Deduction

This is a deduction, not a credit: it lowers your taxable income, not your tax bill dollar for dollar. See what it's actually worth in tax dollars in the 2026 income tax calculator (enter your income there as MAGI minus the deduction shown above). 2025–2028 only, fixed dollar amounts (26 U.S.C. §163(h)(4), no inflation adjustment in the statute). Unlike the tips and overtime deductions, married filing separately can claim this one — it just uses the same $100,000 threshold as single filers, not $200,000. Full mechanics and worked examples: the auto loan interest deduction guide. Comparing loan vs. lease or sizing your budget first? See the car loan vs lease calculator and car affordability calculator. Not tax advice.

How it works

A new OBBBA deduction for tax years 2025-2028: up to $10,000 a year of interest on a loan for a new, US-final-assembled personal vehicle, above the line whether or not you itemize (26 U.S.C. §163(h)(4)). It phases out $200 per $1,000 (or part of one) of MAGI over $100,000 ($200,000 joint) -- the Schedule 1-A worksheet rounds the excess up, the opposite of how the tips and overtime deductions round. Unlike tips and overtime, married filing separately is not blocked. More in the auto loan interest deduction guide, including five worked examples and the vehicle/loan eligibility rules.

Worked examples