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Car Loan Interest Deduction CalculatorUp to $10,000 (IRC 163(h)(4))

What is this money worth, or what does it cost, over time?

Deduction for passenger vehicle loan interest after the $10,000 cap and the $200 per $1,000 phase-out of MAGI over $100,000 or $200,000.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Car loan interest deduction
$1,400
Applies to taxable years 2025 through 2028
Interest after the $10,000 cap
$2,400
Phase-out reduction
$1,000
$200 for each $1,000, or part, over the threshold
Drawn to one scale
Car loan interest deduction$1,400
Interest after the $10,000 cap$2,400
Phase-out reduction$1,000
All results
MeasureResult
Car loan interest deduction$1,400
Interest after the $10,000 cap$2,400
Phase-out reduction
$200 for each $1,000, or part, over the threshold
$1,000
How this was worked out
Work shownrecomputed as you type
Capped interest = lesser of interest paid and $10,000
Reduction = $200 x each $1,000 (or part) of modified AGI over $100,000 ($200,000 joint)
Deduction = capped interest - reduction, not below zero

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Capped interest = lesser of interest paid and $10,000
  • Reduction = $200 x each $1,000 (or part) of modified AGI over $100,000 ($200,000 joint)
  • Deduction = capped interest - reduction, not below zero

How it works

Section 163(h)(4) allows a deduction for interest on a loan incurred after December 31, 2024 to buy a new personal-use vehicle, for taxable years 2025 through 2028. The loan must be secured by a first lien. The vehicle must be a car, minivan, van, SUV, pickup truck or motorcycle with a gross vehicle weight rating under 14,000 pounds, with original use by you and final assembly in the United States.

The deduction is capped at $10,000 and reduced by $200 for each $1,000, or portion of $1,000, of modified AGI above $100,000 ($200,000 joint). Fleet sales, commercial vehicles, leases and salvage-title vehicles are excluded. You must report the vehicle identification number on the return.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Does it include used cars?

The statute requires that original use of the vehicle begin with you, so a used purchase does not qualify.

Does a lease qualify?

No. Lease financing is excluded.

How is the partial thousand treated?

The statute says "or portion thereof", so any part of a $1,000 step counts as a full step.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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