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Under the federal tax code, you can deduct up to $10,000 per tax year in interest paid on an eligible auto loan.
This write-off can lower your taxes owed and allow you to keep more of your hard-earned money.
It’s also an above-the-line deduction. That means you can still take the standard deduction AND receive the auto loan interest deduction. Taken together, this makes purchasing a new vehicle even more affordable.
The federal auto loan interest deduction applies to interest paid during tax years 2025 through 2028 on qualifying new auto loans that originated after December 31, 2024.
The federal auto loan interest deduction applies to interest paid during tax years 2025 through 2028 on qualifying new auto loans that originated after December 31, 2024.
Vehicle must be new and secured by a lien; used vehicles and leases do not qualify
Car, minivan, van, SUV, pick-up truck or motorcycle with a gross vehicle weight rating of less than 14,000 pounds
Vehicle’s final assembly must be in the United States
Vehicle must be for personal use, not business or commercial use
There are two ways to find out if your vehicle was made in the United States.
The location of final assembly will be listed on the vehicle information label attached to each vehicle on a dealer's premises.
Alternatively, taxpayers may rely on the vehicle’s plant of manufacture as reported in the vehicle identification number (VIN) to determine whether a vehicle has undergone final assembly in the United States.
The VIN Decoder website for the National Highway Traffic Safety Administration (NHTSA) provides plant of manufacture information. Taxpayers can follow the instructions on that website to determine if the vehicle’s plant of manufacture was located in the United States.
You must include the Vehicle Identification Number (VIN) of the qualifying vehicle on the year’s tax return. Please also consult your tax professional for complete guidelines.
If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.
Yes, the deduction begins phasing out by $200 for each $1,000 over the threshold limit. The threshold limit is for filers with a modified adjusted gross income (MAGI) greater than:
$100k for single filers
$200k for joint filers
The deduction is unavailable for single filers making $150k or above and joint filers making $250k or above.
#1 Cochran offers 20 new car brands, including all the major American manufacturers. Check out our inventory and find a qualifying vehicle for the auto loan interest deduction today.
*This page is for informational purposes only and not intended as legal, tax, or financial advice. Please consult a licensed tax professional for guidance.
