Important Information for Taxpayers who bought a new car in 2025 using a new car loan.

New deduction: Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. (Lease payments do not qualify.)

Maximum Deduction: You can deduct up to $10,000 in interest paid per year. 

Income limitations: The full deduction is available for single filers with a Modified Adjusted Gross Income (MAGI) of up to $100,000, and joint filers with MAGI up to $200,000. The deduction phases out above these limits. 

Vehicle Requirements:

1. 1.  Must be for a loan originated after December 31, 2024.

   2.  Must be a new car, minivan, van, SUV, truck, or motorcycle, weighing under 14,000 lbs.
      You can verify this by checking the sticker on the driver's side doorjamb or using the NHTSA VIN Decoder. 

   3. Must be used strictly for personal use (not business or commercial).

   4. Must be a vehicle for which you are the first owner (used vehicles don't qualify).

   5. Must be secured by a lien on the vehicle; not from a family member.

Documents needed:

1. The vehicle's VIN  (this must be listed on your return)

2. Your loan agreement

3. Purchase documents

4. Monthly statements

Vehicle Loan Interest Deduction Worksheet