01/20/2026
STEWARDSHIP IS KNOWING -
🚗 Auto Loan Interest Deduction — Key Points for 2025
📌 What the law allows
For tax year 2025, you can deduct up to $10,000 of interest paid on a qualifying auto loan.
This deduction is “above the line,” meaning you can claim it even if you take the standard deduction — you don’t have to itemize.
🚘 What loans and vehicles qualify
To be eligible, the auto loan and vehicle must meet all of these requirements:
Loan timing: The auto loan was originated after December 31, 2024.
Purpose: The loan was used to purchase a vehicle for personal use (not for business or commercial purposes).
Vehicle age: The vehicle must be new (not used); used cars don’t qualify.
Manufacturing location: The vehicle’s final assembly must be in the United States.
Lien: The loan must be secured by a lien on the vehicle.
Eligible vehicles include passenger cars, minivans, SUVs, pickup trucks, and motorcycles with a gross vehicle weight of less than 14,000 lbs.
💰 Income limits and phaseouts
The full deduction generally phases out for taxpayers with higher modified adjusted gross income (MAGI) — roughly over $100,000 for single filers and $200,000 for joint filers.
Once MAGI goes above the upper threshold (about $150,000 single / $250,000 married), the deduction may be eliminated entirely.
🧾 How you claim the deduction
You report the deductible interest on your federal tax return (IRS guidance suggests it will be on a new schedule or as an adjustment line).
Some lenders may issue a special form (e.g., Form 1098-VLI) for 2026 filings; for 2025 you can generally use your year-end loan statement showing interest paid.
🗓 Effective dates
The deduction applies for tax years 2025, 2026, 2027, and 2028 — meaning you’ll report it on returns you file in 2026–2029, respectively.
Send a message to learn more
