United States · Tax year 2026, filed in 2027
Car loan interest deduction calculator 2026
A single filer on $75,000 who paid $3,500 of interest on a loan for a new US-assembled car deducts all of it in 2026, cutting their federal income tax by $770.00. With $7,670 withheld, that is a $770.00 refund.
Change the answers below to see your own figures. It runs on the same engine as our full tax refund calculator.
Federal tax refund, 2026 return · single
$3,500.00 car loan interest deduction
It lowers your tax by $770.00. Your estimate: $770.00 refund.
Your return, step by step
| Wages (your adjusted gross income) | $75,000.00 |
|---|---|
| Standard deduction | −$16,100.00 |
| Car loan interest | −$3,500.00 |
| Taxable income | $55,400.00 |
| Federal income tax (top bracket 22%) | $6,900.00 |
| Tax for the year | $6,900.00 |
| Federal tax withheld from your pay | $7,670.00 |
| Your refund | $770.00 |
An estimate for wages only, not a filed return. Federal only: no state refund.
Who gets it, and how much?
Who qualifies
- Interest on a loan for a new car, minivan, van, SUV, pickup or motorcycle under 14,000 pounds, bought for personal use, with its final assembly in the United States.
- The loan must be taken out after December 31, 2024, and secured by the vehicle. Used cars and leases do not count; a qualifying loan you refinance still does.
- You put the vehicle’s VIN on your return.
- You get it whether you take the standard deduction or itemize.
How much
- Up to $10,000 of interest a return.
- It shrinks by $200 for each $1,000 (or part of $1,000) of income over $100,000 ($200,000 married filing jointly), so it is gone at $150,000 ($250,000).
When
- Tax years 2025 to 2028 only, unless Congress extends it.
A worked example
A single filer on $75,000 who paid $3,500 of interest on a loan for a new US-assembled car deducts all of it in 2026, cutting their federal income tax by $770.00. With $7,670 withheld, that is a $770.00 refund.
| Deduction | $3,500.00 |
|---|---|
| Tax it saves | $770.00 |
| Taxable income | $55,400.00 |
| Tax for the year | $6,900.00 |
| Estimate | $770.00 refund |
The result panel above starts on this example, step by step.
What does this estimate leave out?
- It is an estimate, not tax advice and not a filed return.
- State refunds: no state income tax is included, in any state. It is your federal refund only. States decide for themselves whether to follow the new federal deductions, and many do not.
- Self-employment income and self-employment tax, investment income (interest, dividends, capital gains) and any other income besides wages.
- Credits other than the child tax credit and the credit for other dependents: no earned income credit, education credits or child care credit.
- The Additional Medicare Tax (for one job it is withheld as it is owed), the 37% bracket’s trim of itemized deductions, and the route to the refundable child credit for families with three or more children and very low pay.
What else can I work out?
- Tax refund calculator Free 2026 tax refund calculator with the new deductions for tips, overtime, seniors and car loan interest, and the $2,200 child tax credit. No sign-up.
- Child tax credit calculator Work out your 2026 child tax credit: $2,200 a child under 17, up to $1,700 of it refundable, $500 for other dependents, and the income limits.
- No tax on tips calculator See what the no tax on tips deduction is worth to you in 2026: up to $25,000 of tips off your taxable income, the income limit, and your refund.
- No tax on overtime calculator Work out the 2026 no tax on overtime deduction: the “half” of time-and-a-half, up to $12,500 ($25,000 joint), the income limit, and your refund.
- Senior deduction calculator Work out the 2026 senior deduction: $6,000 for each person 65 or over, how it shrinks above $75,000 of income, and your refund.
- Paycheck calculator 2026 Take-home pay per paycheck in 19 states, with 401(k), HSA and every pay schedule.
- Pay by job BLS pay and take-home for 830 jobs, to fill in your wages.
How withholding works: the W-4 form.
Questions about the car loan interest deduction
Which car loans qualify?
A loan taken out after 2024 for a new car, SUV, pickup, van or motorcycle for personal use, with final assembly in the United States, secured by the vehicle. Used cars and leases do not count.
How much car loan interest can I deduct?
Up to $10,000 a year. In our example, $3,500 of interest saves $770.00.
Is there an income limit?
Yes. The deduction shrinks by $200 for each $1,000 of income over $100,000 ($200,000 married filing jointly).
How do I know where my car was assembled?
The label on the car at the dealer shows the final assembly point, and the car’s VIN shows its plant. You put the VIN on your tax return.
Which years does it cover?
Tax years 2025 to 2028.