Can I deduct the interest on my car loan?

What changed

• Interest on a personal car loan is normally personal interest, which is not deductible. For tax years beginning after December 31, 2024 and before January 1, 2029, qualified passenger vehicle loan interest is carved out of that rule.

What has to be true

• The loan was taken out after December 31, 2024, to buy the vehicle, and is secured by a first lien on it. The vehicle is for personal use.
• The vehicle is new to you (its original use starts with you), is a car, minivan, van, SUV, pickup or motorcycle under 14,000 pounds gross vehicle weight, and had its final assembly in the United States.
• The vehicle identification number goes on your return. There is a yearly cap on the interest, and it phases down above an income threshold.

What it turns on

• when the loan was taken out and whether it is secured by the vehicle
• whether the vehicle was new and where its final assembly happened
• whether the vehicle is for personal use
• your modified adjusted gross income

What would make it not apply

• the vehicle was used when you bought it
• the vehicle is leased
• its final assembly was outside the United States
• the loan was taken out before 2025
• the vehicle identification number is not on the return
• the vehicle has a salvage title or is bought for scrap or parts
• it is a commercial vehicle that is not used for personal purposes

The law, quoted

Sources: IRC §163. Each passage below is copied from the document VALID fetched, with the start of its SHA-256 fingerprint.

(iii) VIN requirement Interest shall not be treated as qualified passenger vehicle loan interest under this paragraph unless the taxpayer includes the vehicle identification number of the applicable passenger vehicle described in clause (i) on the return of tax for the taxable year.

IRC §163 — (iii) VIN requirement · law in effect September 29, 2026 · fingerprint a401b917b8d3

(i) In general For purposes of this paragraph, the term "qualified passenger vehicle loan interest" means any interest which is paid or accrued during the taxable year on indebtedness incurred by the taxpayer after December 31, 2024, for the purchase of, and that is secured by a first lien on, an applicable passenger vehicle for personal use.

IRC §163 — (i) In general · law in effect September 29, 2026 · fingerprint a401b917b8d3

The term "applicable passenger vehicle" means any vehicle- (i) the original use of which commences with the taxpayer, (ii) which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails), (iii) which has at least 2 wheels, (iv) which is a car, minivan, van, sport utility vehicle, pickup truck, or motorcycle, (v) which is treated as a motor vehicle for purposes of title II of the Clean Air Act, and (vi) which has a gross vehicle weight rating of less than 14,000 pounds. Such term shall not include any vehicle the final assembly of which did not occur within the United States.

IRC §163 — The term "applicable passenger vehicle" means any vehicle- · law in effect September 29, 2026 · fingerprint a401b917b8d3