Starting in 2025, qualifying taxpayers may deduct up to $10,000 of personal-use car loan interest. This applies only to interest on eligible vehicles and only through 2028.
Vehicle requirements
To qualify, the vehicle must:
- Be purchased after 12/31/2024
- Be used for personal (not business) driving
- Have final assembly in the United States
- Have original use begin with you
- Be financed with a first-lien auto loan (not a lease)
Income limits
The deduction is reduced by $200 per $1,000 of MAGI above:
- $100,000 (single)
- $200,000 (joint filers)
Documentation needed
- Purchase contract
- Loan documents
- Annual interest statement (or monthly statements)
- VIN must be reported on your tax return
Bottom line
If your vehicle meets the requirements, this deduction can reduce your taxable income significantly—especially for higher-interest loans.