Auto Loan Interest Deduction Calculator (2026)
Deduct up to $10,000 of interest on a qualifying new, US-assembled vehicle loan — check eligibility and your phase-out.
Estimate your deduction
Results update instantlyFiling status
Interest only — not principal. Your lender’s January statement shows the annual amount.
Roughly your adjusted gross income — found on last year’s return or your paystub YTD.
Your 2026 auto loan interest deduction
$3,200
Estimated tax savings: $704 · taxed in the 22% bracket
| Interest paid in 2026 | $3,200 |
| Statutory cap (single) | $10,000 |
| Phase-out reduction | −$0 |
| Your deduction | $3,200 |
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How the auto loan interest deduction works
For tax years 2025–2028, you can deduct up to $10,000 of interest paid on a loan for a new vehicle whose final assembly was in the United States. The loan must have been taken out after December 31, 2024, and the vehicle must be for personal use.
This is an above-the-line style deduction: it stacks with the standard deduction, so you don’t need to itemize to benefit. Leases don’t qualify — only purchase loans.
The deduction phases out quickly at higher incomes: it drops $200 for every $1,000 of MAGI over $100,000 (single) or $200,000 (joint), disappearing entirely at $150,000 / $250,000.
Worked example
Priya bought a new US-assembled SUV in March 2026 and paid $3,200 of loan interest this year. Her MAGI is $88,000 — below the $100,000 single threshold — so she deducts the full $3,200. In the 22% bracket, that’s about $704 saved.
Who qualifies for the deduction
- You bought a new vehicle — used vehicles don’t qualify
- Final assembly was in the United States (check the VIN or window sticker)
- The loan originated after December 31, 2024
- The vehicle is for personal use, and your MAGI is under $100,000 (single) or $200,000 (joint) for the full amount
2026 phase-out thresholds
| Filing status | Full deduction if MAGI below | Phases out fully at |
|---|---|---|
| Single | $100,000 | $150,000 |
| Married filing jointly | $200,000 | $250,000 |
Above the threshold, the deduction drops $200 for every $1,000 of additional MAGI.
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Frequently asked questions
How do I know if my car was assembled in the US?
Check the VIN — a first character of 1, 4, or 5 means US assembly — or look at the window sticker’s “final assembly point.”
Do leased vehicles qualify?
No. The deduction applies only to interest on a purchase loan, not lease payments.
Can I deduct interest on a refinanced auto loan?
Interest on a qualifying loan that is refinanced generally remains deductible, as long as the original loan met all requirements.
Is there a vehicle price limit?
The law doesn’t set a price cap, but the interest deduction is capped at $10,000 per year regardless of loan size.
What MAGI limits apply in 2026?
Full deduction below $100,000 (single) or $200,000 (joint); it phases out $200 per $1,000 above that and ends at $150,000 / $250,000.