Tax year 2025 · returns filed in 2026

Car loan interest deduction for 2025

Direct answer: For tax year 2025, claim qualified passenger vehicle loan interest on the final Schedule 1-A (Part IV lines 22–30); the schedule total on line 38 goes to Form 1040 line 13b.

Tax year 2025 is the first year of the federal deduction for qualified passenger vehicle loan interest. Most people filed those returns in the 2026 filing season. If you are amending a 2025 return, or you still have a 2025 filing to finish, use the final 2025 Schedule 1-A, not the 2026 draft. The calculator opens on 2025 when you follow that link.

What 2025 changed

Before 2025, interest on a personal car loan was personal interest and not deductible. Section 70203 of Public Law 119-21, signed July 4, 2025, carved qualified passenger vehicle loan interest out of that disallowance for tax years beginning after December 31, 2024, and before January 1, 2029. The loan itself must have been incurred after December 31, 2024. A 2024 loan does not become qualified because you paid interest on it during 2025.

IRS Topic No. 505 states the outline: up to $10,000 a year, available whether or not you itemize, limited by modified adjusted gross income, on a loan incurred after December 31, 2024, secured by a first lien, for a vehicle whose original use starts with you and whose final assembly was in the United States.

Which lines are final for 2025

Part IV of the 2025 Schedule 1-A is lines 22 through 30. Line 22 holds the VIN and the interest, split between interest deducted on Schedule C, E, or F and the amount left for Schedule 1-A. Line 24 applies the $10,000 cap. Lines 26 through 29 apply the phase-out: $100,000, or $200,000 if married filing jointly, then $200 for each $1,000 or part of $1,000 over that threshold, rounding up. Line 30 is the deduction. Line 38 of the schedule goes to Form 1040 or 1040-SR, line 13b, and to Form 1040-NR, line 13c.

The 2025 Form 1040 instructions still point to the proposed regulations for a couple of narrow points, including a substitute vehicle and a change of obligor after a death. Final regulations were published in the Federal Register on September 8, 2026, effective November 9, 2026, and Treas. Reg. §1.163-16 applies to taxable years beginning after December 31, 2024, and before January 1, 2029. If you are amending after those regulations are in effect, read them together with the 2025 instructions. The cap, the thresholds, and the round-up rule are the same in the statute, the 2025 form, and the final regulations.

2025 documents, including the transition statement

The IRS checklist for this deduction asks for a lender statement showing qualified interest paid in 2025, the VIN, and purchase facts that show the vehicle was new, personal-use, under 14,000 pounds GVWR, and finally assembled in the United States. Notice 2025-57, described in the preamble to the final regulations, let an interest recipient satisfy 2025 reporting by making a statement of the year’s interest available. You do not have to wait for a Form 1098-VLI that the lender was not required to file for 2025. Keep the statement. The VIN still has to go on Schedule 1-A.

The 2025 standard deduction is a different number

Publication 501 (2025) lists a basic standard deduction of $31,500 for married filing jointly or a qualifying surviving spouse. Single and married filing separately are $15,750. Head of household is $23,625. Those amounts come from section 63(c) as amended by the One, Big, Beautiful Bill Act and restated in Revenue Procedure 2025-32. They replaced the earlier $30,000 joint figure in Revenue Procedure 2024-40.

The car loan interest deduction is not inside that $31,500. You can claim both. The standard deduction is claimed in the usual place. The car-loan amount is additional, on Schedule 1-A. The full comparison, including the extra amount if you are 65 or blind, is on the 2025 standard deduction page.

Estimate a 2025 deduction