Tax Return Changes for Car Buyers | HelloBooks Who qualifies for the car loan interest deduction, why EV buyers lost the credit, and what to collect from clients who bought a car in 2025 or 2026.
A client who bought a car in 2025 may gain a new deduction or may have just missed a credit, depending on the car and the date.
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Car loan interest deduction, up to
$10,000 a year
Applies: 2025 to 2028From IRS.gov · checked October 10, 2026
The loan must be taken out after 2024 to buy a new vehicle for personal use, secured by the vehicle, and the vehicle must be under 14,000 lb with final assembly in the US. Leases do not qualify, and the VIN goes on the return each year.
Clients who bought an electric vehicle after September 30, 2025 without a binding contract and payment by that date cannot claim the clean vehicle credit.
A vehicle used in a business is depreciated, not claimed under this personal deduction. For owners who use one car for both, keep a mileage log and record loan payments split between principal and interest, so the business and personal parts can be separated.
The plain-English summary for business owners
Schedule 1-A · car loan interest
Individual and business returns · energy credits
New form · tax year 2025 onward
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
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