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Car Loan Interest Deduction Calculator (Schedule 1-A) | HelloBooks Calculate deductible car loan interest: the $10,000 cap and a $200 cut for each $1,000 or part of $1,000 of MAGI over $100,000 ($200,000 joint).

Calculator · Schedule 1-A, Part IV

Car loan interest deduction calculator

Enter the interest a client paid on a qualifying vehicle loan, their filing status and MAGI. The calculator follows lines 24 to 30 of Schedule 1-A, including the rounding rule that differs from the tips and overtime parts.

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After the cap
$0
Phase-out threshold (MAGI)
$100,000
MAGI over threshold
$0
Phase-out reduction
$0
Deduction on Schedule 1-A
$0

Estimate only, following the 2025 Schedule 1-A. Confirm eligibility and figures on the return.

How the calculation works

The calculator follows these steps from the IRS form or worksheet, in order.

  1. Line 24: the smaller of qualified interest paid or $10,000.
  2. Lines 26 to 27: subtract $100,000 ($200,000 if married filing jointly) from MAGI.
  3. Line 28: divide by $1,000 and round UP to the next whole number.
  4. Line 29: multiply by $200. Line 30: subtract from line 24, not below zero.

Source: Schedule 1-A (Form 1040) 2025, Additional Deductions; IRS, tax deductions for working Americans and seniors. Checked on IRS.gov October 21, 2026.

The rounding rule is the opposite of tips

Lines 11 and 19 of Schedule 1-A round down; line 28 rounds up. One dollar of MAGI over the car loan threshold already costs $200. Software handles this, but a hand check that copies the tips method will overstate the deduction.

Qualifying the loan before the number

The loan must be new after 2024 and secured by a personal-use vehicle under the weight limit whose final assembly was in the United States. Leases do not qualify, and the VIN goes on the return.

Married filing separately is not barred for this deduction, unlike the other three Schedule 1-A items, so the calculator allows it with the lower threshold.

FAQ

Frequently asked questions

What should I ask the client for?
The loan agreement or purchase contract (date and lender), the year-end interest statement, and the vehicle’s VIN. The window sticker or the VIN decoder shows where final assembly took place.
Can a business-use vehicle qualify?
No. The IRS limits the deduction to a personal-use vehicle, not one used for business or commercial purposes.
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Sources

Estimates for tax professionals, not advice on a specific return. Figures and formulas are from IRS.gov on the date shown; confirm against the current form and instructions before filing.

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