Calculate your car loan interest deduction under Schedule 1-A. If you financed a US-assembled vehicle, you may be able to deduct up to $10,000 in annual loan interest.
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The Schedule 1-A auto loan interest deduction is a new tax benefit for tax year 2025 that allows taxpayers to deduct interest paid on car loans for vehicles assembled in the United States. This above-the-line deduction can provide significant savings for Americans financing American-assembled vehicles.
The deduction covers interest paid on auto loans for qualifying vehicles purchased for personal use. The vehicle must have final assembly in the United States—this includes many popular models from both domestic and foreign manufacturers that operate US assembly plants.
The maximum deduction is $10,000 per year, and the interest must have been paid on or after January 20, 2025. You'll need your loan statement showing interest paid and verification of your vehicle's US assembly status (typically found via VIN lookup).
Verify your vehicle was assembled in the US using your VIN (check NHTSA database)
Gather your auto loan statement showing interest paid for 2025
Enter your total interest paid (or monthly payment breakdown)
Specify the loan origination and interest payment dates
Apply the $10,000 cap and any income-based phase-outs
View your total auto loan interest deduction on Line 30 of Schedule 1-A
Scenario: David purchased a 2025 Honda Accord (assembled in Marysville, Ohio) for $35,000 in February 2025. He financed $30,000 at 6.5% APR for 60 months.
Loan Amount
$30,000
Interest Rate
6.5% APR
2025 Interest Paid
$1,780
Interest Deduction (L30)
$1,780
David paid $1,780 in interest during 2025, well under the $10,000 cap. At a 22% tax bracket, this saves him approximately $392 in federal taxes. In year 2 of his loan, he'll pay approximately $1,650 in interest—also deductible.
Step-by-step instructions to verify your vehicle's US assembly status using the NHTSA database.
Enter your loan details or annual interest amount—we handle the calculations.
Automatically applies the annual cap and tracks remaining deduction capacity.
The vehicle must have final assembly in the United States. This includes many vehicles from domestic manufacturers (Ford, GM, Chrysler) as well as foreign brands with US plants (Honda, Toyota, BMW, etc.). You can verify assembly location by checking your vehicle's VIN through the NHTSA decoder at vpic.nhtsa.dot.gov.
The maximum deduction is $10,000 per year for qualifying auto loan interest. If you paid less than $10,000 in interest, you can deduct the full amount paid. If you paid more, the deduction is capped at $10,000.
No, the Schedule 1-A auto loan interest deduction applies only to financed (purchased) vehicles. Lease payments, including any implicit interest charges, do not qualify. The deduction is specifically for interest on auto purchase loans.
You can combine interest from multiple qualifying vehicle loans, but the total deduction is still capped at $10,000 per year. All vehicles must meet the US assembly requirement to include their loan interest.
Your lender should provide an annual statement (often Form 1098 or similar) showing total interest paid. You can also find this information in your loan account online, or by reviewing your monthly statements. For a new loan, the amortization schedule shows interest vs. principal for each payment.
This calculator provides estimates based on the information you enter. It is designed to help you understand potential deductions but does not constitute tax advice.
All calculations must be independently verified before filing. The preparer of record bears full responsibility for the accuracy of any filed return. We assume no liability for errors or omissions.Read full disclaimer →
Our free calculator helps you estimate your Schedule 1-A deduction with a complete audit trail.