The short answer: maybe. If you financed a new car, SUV, pickup or motorcycle that was assembled in the United States, the loan started after 2024, and the vehicle is for personal use, you can deduct up to $10,000 of the interest you paid in 2026. The deduction shrinks above $100,000 of income ($200,000 if married filing jointly). You don't need to itemize.
Personal car loan interest hadn't been deductible since 1986. The 2025 tax law brought it back for loans that meet strict rules, from the 2025 through the 2028 tax years.
The checklist: does your loan qualify?
All of these have to be true.
The loan
- It started after December 31, 2024. A loan from 2024 or earlier doesn't qualify, even if you're still paying it.
- It was used to buy the vehicle. A home equity loan or an unsecured personal loan doesn't count. Refinancing a loan that already qualified generally still counts, up to the balance of the old loan when you refinanced.
- It's secured by a first lien on the vehicle. That's normal for a car loan from a bank, credit union or dealer.
- It's a loan, not a lease. Lease payments don't qualify.
The vehicle
- New, not used. The vehicle's original use has to start with you.
- The right type: a car, minivan, van, SUV, pickup truck or motorcycle with a gross vehicle weight rating under 14,000 pounds.
- Final assembly in the United States.
- For personal use, not mainly for a business.
You
- You'll need to put the vehicle identification number (VIN) on your return every year you claim the deduction.
- Your income has to be under the phase-out range, or partly into it.
How to check where your car was assembled
Two easy ways:
- The window sticker. New vehicles list the "final assembly point" on the label.
- Your VIN. The federal NHTSA VIN decoder shows the plant where the vehicle was built.
A vehicle from a U.S. brand isn't automatically U.S.-assembled, and plenty of foreign brands build cars in the U.S. Check the specific vehicle.
How much you can deduct
Up to $10,000 of interest paid in 2026, per return. The limit is the same whether you're single or married filing jointly, and it covers all your qualifying loans combined.
The income limit
The deduction shrinks once your modified adjusted gross income (MAGI) passes $100,000, or $200,000 if married filing jointly. This one phases out faster than the tips and overtime deductions:
- Subtract $100,000 (or $200,000) from your MAGI.
- Divide by $1,000 and round up to a whole number.
- Multiply by $200. That's your reduction.
So you lose $200 of deduction for every $1,000, or part of $1,000, of income over the threshold. The deduction is gone at $150,000 for a single filer and $250,000 for a married couple filing jointly.
Worked examples
Example 1: A new pickup. Tony is single. In March 2026 he financed a new pickup built in Texas. He paid $3,800 in interest in 2026. His MAGI is $72,000.
| Step | Amount |
|---|---|
| Interest paid | $3,800 |
| Capped at $10,000 | $3,800 |
| MAGI over $100,000? | No |
| Car loan interest deduction | $3,800 |
Example 2: Partly phased out. Mia and Jon file jointly with MAGI of $212,300. They paid $4,500 in interest on a qualifying SUV loan.
| Step | Amount |
|---|---|
| Capped amount | $4,500 |
| MAGI minus $200,000 | $12,300 |
| Divided by $1,000, rounded up | 13 |
| Reduction (13 × $200) | $2,600 |
| Deduction | $1,900 |
Example 3: Doesn't qualify. Sara bought a two-year-old used sedan in 2026 with a loan. Used vehicles don't qualify, so she can't take the deduction, no matter where the car was built.
Where to find the interest you paid
Your lender may send a year-end statement showing the interest you paid in 2026. If you don't get one, add up the interest from your monthly statements or your lender's online account. Keep the purchase contract too, since it shows the purchase date, the VIN and that the vehicle was new.
If you also use the car for work
If you're self-employed and use the vehicle partly for your business, the business share of the interest is deducted on your business schedule. Only the personal share counts toward this deduction. Schedule 1-A has separate columns for the two parts so the same interest isn't deducted twice.
How you claim it
The deduction goes on Schedule 1-A, Part IV, with the VIN for each vehicle. The total from Schedule 1-A flows to your Form 1040.
Navo asks about your loan and your car and fills in Schedule 1-A for you.
Things people often get wrong
- Leases. Lease payments never qualify.
- Used cars. Only new vehicles qualify.
- Older loans. A loan taken out in 2024 doesn't qualify, even though you're paying interest in 2026.
- Deducting payments instead of interest. Only the interest part of your payments counts, not principal.
- Assuming the brand tells you where it was built. Check the window sticker or the VIN.
Frequently asked questions
Do I need to itemize? No. The car loan interest deduction works with the standard deduction too.
I bought two qualifying cars. Can I deduct $10,000 for each? No. The $10,000 limit is per return for all qualifying loans combined.
Does an RV or a large work truck qualify? Only if it's one of the listed vehicle types and under 14,000 pounds gross vehicle weight rating. Most RVs aren't on the list.
Can I deduct interest on a loan for an electric car? Yes, if it meets the same rules: new, U.S.-assembled, financed after 2024 and for personal use.
Related guides
This post is general information, not tax advice for your situation. Sources: IRS, One, Big, Beautiful Bill Act: Tax deductions for working Americans and seniors; IRS fact sheet on Schedule 1-A; 2025 Schedule 1-A (Form 1040).