Car loan interest deduction

For tax years 2025-2028, you can take an annual deduction of up to $10,000 of qualified passenger vehicle loan interest. This deduction is available for both itemizing and non-itemizing taxpayers and is subject to limitations based on your modified adjusted gross income. The interest must be paid or accrued on indebtedness you incurred after December 31, 2024, for the purchase of, and that is secured by a first lien on, a vehicle. The vehicle’s original use must start with the taxpayer (used vehicles do not qualify), and the vehicle’s final assembly must be in the United States.