One Big Beautiful Bill Act – Vehicle Car Loan Interest Deduction

Vehicle Car Loan Interest Deduction

See FS 2025 03

You may be able to deduct the interest you pay on a car loan, but only if certain rules are met.

What vehicles qualify?

• The vehicle must be for Personal use only (not business).
• Qualifying vehicles include:
  • Cars
  • SUV’s
  • Minivans
  • Vans
  • Motorcycles
  • Pickup trucks
• The vehicle must be finally assembled in the United States.

Important paperwork

• The Vehicle Identification Number (VIN) must be listed on your tax return.
• A VIN decoder may be used to confirm where the vehicle was assembled. See  Vin Decoder
• You will receive Form 1098-VLI showing the interest paid, but not until 2027.

Income Limits

• MAGI phase-out applies.
  • Higher income may reduce or eliminate the deduction.

Deduction Limits

• You can deduct up to $10,000 of qualifying loan interest.

Loan requirements

• The loan must be taken out after December 31, 2024.
• Leases do not qualify.
• If you refinance a qualifying vehicle loan in 2025, the interest may qualify for the deduction.