Schedule 1-A · Tax year 2026

Car Loan Interest Calculator: Estimate the 2026 Deduction

For tax year 2026 there is a deduction for interest paid on a loan for a new vehicle, up to $10,000 per return. The vehicle must be new with final assembly in the United States, the loan must have originated after December 31, 2024 and be secured by the vehicle, and the deduction phases out from $100,000 of modified AGI, or $200,000 on a joint return. Enter the interest you paid in 2026 and the calculator estimates the deduction.

Last reviewed: November 4, 2026.

Checked against IRS sources · Reviewed November 4, 2026

The car loan interest calculator

Filing status Amount you borrowed (optional, dollars)

Context only. The deduction is figured on the interest you paid, not on the size of the loan, so this figure does not change the estimate.

Interest you paid on the loan in 2026 (dollars)

From your lender statements. In January 2027 your lender will also report this figure on the new Form 1098-VLI, explained below.

Modified adjusted gross income estimate (dollars)

For most filers this is the same as adjusted gross income. It is used only to check the phaseout below.

Estimate only. This tool gives a general estimate based on the figures you entered and the published IRS rules cited on this page. It is not tax advice, it is not a tax return, and it cannot be relied on to avoid any tax penalty. Tax law and IRS guidance change. Confirm your figures against the current IRS instructions for the form you file, or ask a qualified tax professional.

Nothing you enter is sent anywhere. The calculation runs in your browser. This calculator never asks for a vehicle identification number (VIN).

this page never asks for a VIN

The rules, in one table

The car loan interest deduction, tax year 2026
Maximum	$10,000 of interest per return
Vehicle rule	The vehicle must be new, and its final assembly must have occurred in the United States
Loan rule	The loan must have originated after December 31, 2024, and be secured by the vehicle
The statement	Lenders report the interest on a new statement, Form 1098-VLI. The first statements, covering 2026, arrive in January 2027
On the return	The law requires the vehicle identification number (VIN) of the vehicle to be reported with this deduction. That number goes on your tax return, not into this site: no page here asks for it
Phaseout	The amount after the $10,000 limit is reduced by $200 for each $1,000, or part of $1,000, of modified AGI over $100,000, or $200,000 on a joint return (section 163(h)(4)(C)(ii) of the Internal Revenue Code)
Payroll tax	Unchanged. This deduction reduces income tax only
Years	Tax years 2025 through 2028

This calculator estimates the deduction from the interest you enter. It does not check whether a specific vehicle meets the final assembly rule.

For 2025, the first year of this deduction, more than 1.4 million filers claimed it, with an average claim over $1,800 (Treasury figures reported in Deloitte Tax News and Views, June 5, 2026; IRS Fact Sheet FS-2026-04).

the first statements land in January 2027

Form 1098-VLI: the new statement, explained

What it is. Form 1098-VLI is a new information statement for vehicle loan interest. It reports the interest a lender received during the year on a loan that meets the rules above, so the borrower has the figure the deduction is based on.

Who sends it. The lender that receives the interest sends it to the borrower whose loan it is, the same way a mortgage lender sends a statement of mortgage interest.

When it arrives. The first 1098-VLI statements cover tax year 2026 and arrive in January 2027. There was no statement for 2025, the first year of the deduction; filers for that year worked from their own loan records.

If yours does not arrive. Work from your own records: monthly loan statements and any year-end summary from the lender show the interest paid. Keep those records with your tax papers. The estimate above runs on the interest figure you enter, whether it came from a 1098-VLI or from your statements.

All four new deductions, including this one, are set out together on the Schedule 1-A page, and all four can be estimated together in the new deductions estimator.

Sources

Public Law 119-21, enacted July 4, 2025. Created this deduction, including its $10,000 limit, its vehicle and loan rules, and the phaseout in section 163(h)(4)(C)(ii) of the Internal Revenue Code: $200 for each $1,000, or part of $1,000, of modified AGI over $100,000, or $200,000 joint, applied after the limit.
IRS, Fact Sheet FS-2026-04, and Treasury claimant figures reported in Deloitte Tax News and Views, June 5, 2026. Tax year 2025 claimant counts and averages.
IRS, Draft Tax Forms listing. Draft Schedule 1-A posted September 4, 2026. Draft document, not for filing.

Last reviewed: November 4, 2026.