Car Loan Interest Deduction Phase-Out Calculator 2026
Enter your auto-loan interest and income to see your allowed deduction after the phase-out.
You can deduct up to $10,000 of interest on a qualifying new-vehicle loan. The deduction phases out above $100,000 MAGI (single) / $200,000 (married filing jointly), dropping $200 for every $1,000 of income over the threshold — a steeper phase-out than the tips and overtime deductions. Enter your figures below.
This calculator applies the car loan interest deduction's specific phase-out, which is twice as fast as the tips and overtime versions — $200 per $1,000 of income over the threshold instead of $100. Enter the interest you paid this year (not your total car payment) and your income to see the allowed amount.
Only the interest portion of your payments counts, and only up to $10,000. Your lender's year-end statement (or Form 1098 equivalent) shows the interest you paid.
Car loan interest deduction calculator
Why this phase-out bites sooner
Two things make the car loan phase-out more restrictive than tips or overtime. First, it starts lower — $100,000 single / $200,000 joint, versus $150,000 / $300,000. Second, it reduces the deduction twice as fast, at $200 per $1,000. Together, the $10,000 deduction is gone by $150,000 MAGI (single) or $250,000 (joint).
| MAGI | Amount over $100k | Reduction | Deduction kept |
|---|---|---|---|
| $100,000 | $0 | $0 | $10,000 |
| $120,000 | $20,000 | $4,000 | $6,000 |
| $140,000 | $40,000 | $8,000 | $2,000 |
| $150,000 | $50,000 | $10,000 | $0 |
Interest, not the whole payment
A common mistake is entering the total car payment. Only the interest counts. Early in a loan, interest is a larger share of each payment; later, it shrinks. Check your amortization schedule or year-end statement for the exact interest paid, and remember the vehicle still has to meet the new + US-final-assembly requirements to deduct any of it.
Frequently asked questions
What is the income limit for the car loan interest deduction?
It phases out above $100,000 MAGI for single filers and $200,000 for married filing jointly, dropping $200 for every $1,000 over the threshold. The $10,000 deduction is fully gone by roughly $150,000 (single) / $250,000 (joint) MAGI.
How much car loan interest can I deduct?
Up to $10,000 of interest per year on a qualifying new-vehicle loan, before the income phase-out. Only the interest portion of your payments counts, not principal.
Why is this phase-out stricter than the tips deduction?
The car loan deduction starts phasing out at a lower income ($100k/$200k vs. $150k/$300k) and reduces twice as fast ($200 vs. $100 per $1,000). So higher earners lose it much sooner.
Does the vehicle still need to qualify?
Yes. Even within the income limits, the car must be new, personal-use, and have final assembly in the US, financed by a loan that originated after December 31, 2024. Check your vehicle with the US assembly checker and your VIN.
IRS sources & verification
Last reviewed July 12, 2026.