What is Car loan interest deduction?
In short
For 2025 through 2028, individuals can deduct up to $10,000 a year of interest on a loan taken out after 2024 to buy a new vehicle for personal use whose final assembly took place in the United States.
Key takeaways
- The limit is reduced by $200 for each $1,000 of modified adjusted gross income over $100,000 ($200,000 joint).
- It is available whether or not the taxpayer itemizes.
- Used vehicles and leases don't qualify, and the loan must be secured by the vehicle.
Where it's tested
REG: Individual Taxation: Adjustments & Deductions — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under the One Big Beautiful Bill Act, what is the state and local tax (SALT) deduction cap, and is it permanent?