Federal Auto Loan Interest Deduction 2025-2028

Who Is Eligible?

To qualify for this federal tax benefit, you must meet these criteria:

• The vehicle must be purchased new (not leased or used).
• The loan must be incurred after December 31, 2024 and secured by a lien on the vehicle.
• The vehicle must be for personal use (no business/fleet purchases).
• You must include the vehicle’s VIN on your tax return to claim the deduction.
• If a qualifying auto loan is refinanced, the deductible interest generally still qualifies.
• Under IRS rules, the deduction is an above-the-line deduction, so you can claim it even if you don’t itemize your tax return.

Which Vehicles May Qualify?

Qualifying Vehicles Must:

• Be a car, minivan, van, SUV, pickup truck, or motorcycle.
• Have a gross vehicle weight rating (GVWR) of less than 14,000 lbs.
• Have undergone final assembly in the United States.
• Used vehicles and leased vehicles do NOT qualify for this deduction.

Final assembly in the United States is the key requirement – even some foreign-brand vehicles assembled here may qualify.

Verify final assembly by checking the VIN with the official NHTSA VIN Decoder, and consult your tax advisor for guidance.

Note: The deduction phases out by roughly $200 for every $1,000 over the threshold.

Phase-out figures are approximate; actual IRS forms and guidance will specify the exact reduction steps.

See New Vehicles that may qualify for the Auto Loan Interest Deduction. Eligibility must be determined on a vehicle-by-vehicle basis using the VIN and IRS requirements, don’t forget to Check Your VIN Eligibility.

Disclaimer: This content is for informational purposes only and is not tax, legal, or financial advice. Eligibility for the auto loan interest deduction depends on individual circumstances and IRS requirements. Please consult a qualified tax professional.