Car Loan Interest Deduction 2025: Preparer Checklist | HelloBooks Who qualifies for the new car loan interest deduction, the cap and phase-out, the VIN requirement, and the loan documents to collect.
Personal car loan interest is deductible again for 2025 to 2028, but only for loans and vehicles that pass several tests. A short checklist at intake saves an amended return later.
Free Plan with invoices within 200 transactions, bills & quotes — no credit card.
Maximum deduction
$10,000 a year
Applies: 2025 to 2028From IRS.gov · checked October 10, 2026
Interest up to $10,000 a year a year is deductible, phasing out over $100,000 ($200,000 joint) of modified AGI. Before you get to the amount, the loan and vehicle both have to qualify.
Ask for the loan agreement or the lender’s year-end interest statement, plus the vehicle’s window sticker or another document showing where it was assembled. Lenders got transition relief on 2025 reporting, so do not assume a lender statement will arrive in a standard format.
If a client uses the vehicle partly for business, the business share belongs on Schedule C as before. Keep the two calculations apart so the same interest is not claimed twice.
The plain-English summary for business owners
New form · tax year 2025 onward
Schedule 1-A · seniors 65 and over
Schedule 1-A · qualified tips
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.
Free Plan with full access to the AI accountant — no credit card, no time limit.