Can I deduct the whole car payment?

No. Only qualifying interest is included. Principal repayments, fees and a lease payment are not the qualifying interest amount.

Do used vehicles qualify?

No. The vehicle must be new, satisfy the final-assembly and vehicle requirements, and be financed with a qualifying loan.

Do I have to itemize?

This deduction can be available with either the standard deduction or itemized deductions. The $10,000 limit is per return, including joint returns.

2026 Car Loan Interest Deduction Calculator

Calculate the eligible passenger vehicle loan interest deduction and estimated federal savings for 2026, including the $10,000 cap and MAGI phase-out.

Your comparison inputs

Change the example values to match your situation, then calculate.

Filing status

Modified adjusted gross income ($)

Use MAGI for Schedule 1-A, including any required excluded-income add-backs.

Federal taxable income before this deduction ($)

After your standard or itemized deduction. Do not enter gross salary here.

Qualified personal-use interest paid this year ($)

Use interest, not principal payments. Exclude any interest already deducted as a business expense.

Confirm eligibilityThe vehicle was purchased new for personal use and is an eligible car, van, SUV, pickup or motorcycle under 14,000 pounds GVWR.The vehicle’s final assembly was in the United States.The qualifying loan originated after December 31, 2024, is secured by a first lien on the vehicle, and is not from a related lender.I can document eligible interest and the vehicle VIN on my return. This is a purchase loan, not a lease.

Your results

Estimates based on your inputs and the assumptions below.

Enter your details and select Calculate, or load the worked example to see a complete result.

How this calculator works

Start with qualifying personal-use interest actually paid, excluding principal and amounts claimed elsewhere. Cap the total across eligible loans at $10,000 per return.

The MAGI threshold is $100,000 for non-joint returns and $200,000 for joint returns. Reduce the capped amount by $200 for every $1,000 or partial $1,000 above the threshold. Car-loan phase-out increments round up, unlike the tips and overtime calculations.

The resulting deduction reduces ordinary taxable income. Compare estimated federal tax with and without it. Used cars, leases and unsecured personal loans do not qualify. Eligible refinancing may qualify only within the remaining qualifying debt rules; enter only the eligible interest.

Worked example

For a single filer with $80,000 MAGI and $63,900 taxable income, $2,500 of eligible interest produces an estimated $550 federal tax saving. At $100,001 MAGI, the same interest is reduced by $200 before calculating savings.

Assumptions and sources

This estimate uses 2026 ordinary federal income tax brackets and isolates this deduction. It excludes credits, AMT, capital-gains rates, QBI interactions, state taxes and payroll taxes. Enter taxable income before this deduction but after any other deductions. Eligibility confirmations are your own assessment; the tool does not verify your records. Rules reviewed September 30, 2026. The linked 2025 Schedule 1-A supplies the phase-out mechanics; 2026 bracket amounts come from Revenue Procedure 2025-32.

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