Car Loan Interest Deduction Calculator
The One, Big, Beautiful Bill Act lets you deduct up to $10,000 in auto loan interest for US-manufactured vehicles. Enter your income and loan details below to see how much you save.
annual savings ($30/month)
- Car loan interest paid
- $3,000
- After $10,000 cap
- $3,000
- Deductible amount
- $3,000
8.37%
Before
7.77%
After OBBBA
- ✓Vehicle is manufactured or assembled in the United States
- ✓Vehicle is used primarily for personal transportation
- ✓The loan is a bona fide auto loan (not a HELOC or other credit line)
- ✓Interest is actually paid during the tax year (not just accrued)
- ✓Loan was originated (the debt was incurred) after December 31, 2024
- ✓Loan is secured by a first lien on the vehicle, and its VIN is reported on your return
This deduction applies to federal income tax only. Available for tax years 2025–2028 (loans originated after Dec 31, 2024). Leases, fleet sales, and salvage-title vehicles don't qualify.
How the OBBBA Car Loan Interest Deduction Works
Deduction Cap
Up to $10,000 in car loan interest per return. This is an above-the-line deduction — you don't need to itemize.
US-Made Requirement
Only vehicles manufactured or assembled in the United States qualify. Check your VIN or window sticker for assembly location.
Income Phase-Out
Your capped interest deduction is reduced by $200 for every $1,000 (or part of $1,000) your MAGI is over $100,000 (single/HoH/MFS) or $200,000 (MFJ). Because the reduction is a flat dollar amount rather than scaled to your interest paid, a below-cap deduction can zero out well before the $150,000/$300,000 point that fully zeroes out the $10,000 cap.
Tax Years 2025–2028
The provision is temporary — it applies to tax years 2025 through 2028 unless extended by Congress.
Frequently asked questions
Who qualifies for the OBBBA car loan interest deduction?
Taxpayers who pay interest on a loan for a new, personal-use vehicle manufactured or assembled in the US. The loan must have originated after December 31, 2024, be secured by a first lien on the vehicle (not a lease, HELOC, or other line of credit), and the VIN must be reported on your return.
What vehicles qualify for the deduction?
Vehicles manufactured or assembled in the United States — including foreign brands with US assembly plants. Check your vehicle's VIN or window sticker for assembly location.
How does the phase-out work?
Your capped ($10,000 max) interest deduction is reduced by $200 for every $1,000 (or part of $1,000) your MAGI is over $100K (single/HoH/MFS) or $200K (MFJ) — a stepped reduction, not a smooth ramp. Because it's a flat dollar reduction rather than one scaled to your interest paid, a smaller deduction can zero out at a lower MAGI than the full $10,000 cap would.
Can I claim this with other OBBBA deductions?
Yes. The car loan, tip, overtime, and senior bonus deductions are all independent. You can claim every one you qualify for.
Sources
Related Calculators
No Tax on Tips
OBBBA tip-income deduction — $25,000 annual cap, MAGI phaseout from $150k/$300k
No Tax on Overtime
OBBBA overtime-premium deduction — $12,500 single / $25,000 joint cap, MAGI phaseout from $150k/$300k
Federal Income Tax Calculator
10–37% brackets, $15,750 standard deduction, progressive calculation
Senior Bonus Deduction
OBBBA $6,000 deduction per senior 65+, phaseout $75k–$175k (single) / $150k–$250k (MFJ)