02/03/2026
Good afternoon, everyone! I hope you stayed safe during :"Snowmageddon" in Myrtle Beach.
I was asked what the max is that you can deduct for car interest.
Here is some important information:
"Under the One Big Beautiful Bill Act (OBBBA), you can deduct a maximum of $10,000 per year in interest paid on qualified auto loans for tax years 2025 through 2028.
This deduction is "above-the-line," meaning you can claim it even if you take the standard deduction rather than itemizing.
Key Requirements to Claim the Maximum Deduction
To qualify for the deduction, the following criteria must be met:
Purchase Date: The vehicle must be purchased new, with a loan originated after December 31, 2024, and before January 1, 2029.
Vehicle Origin: The vehicle's final assembly must have occurred in the United States.
Use: The vehicle must be for personal use (more than 50% of the time).
Vehicle Type: Passenger vehicles, trucks, SUVs, or motorcycles with a gross vehicle weight rating (GVWR) under 14,000 pounds.
Exclusions: Leased vehicles and used vehicles do not qualify.
Income Limitations (Phase-Outs)
The $10,000 maximum deduction is subject to income limits based on your Modified Adjusted Gross Income (MAGI):
Single Filers: Full deduction if MAGI is under $100,000; phases out completely at $150,000.
Married Filing Jointly: Full deduction if MAGI is under $200,000; phases out completely at $250,000.
If your income is above these thresholds, the allowable deduction is reduced by $200 for every $1,000 over the limit.
Important Details
Refinancing: Interest paid on a refinanced loan is generally eligible, provided the original debt qualified.
Documentation: You must keep records of interest paid, typically provided by your lender on a year-end statement.
How to Claim: You will need to report the vehicle identification number (VIN) and the interest paid on your federal tax return. "
Though every situation is unique, and if you're not already using our service, or you need to stay up to date with your tax filings for 2025, please call our office and set up an appointment now. 843-238-5970
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