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Last reviewed October 31, 2026.

Schedule 1-A · Form 1040

How to claim the car loan interest deduction

Direct answer: Claim qualified passenger vehicle loan interest on Schedule 1-A, Part IV (“No Tax on Car Loan Interest”), report every VIN, apply the $10,000 cap and MAGI phase-out, then attach the schedule to Form 1040. You can claim it with the standard deduction or with itemized deductions.

1. Confirm you have qualified interest

Only qualified passenger vehicle loan interest counts. In short: a loan you originated after December 31, 2024, to buy a new car, minivan, van, SUV, pickup, or motorcycle for personal use, secured by a first lien, with gross vehicle weight rating under 14,000 pounds and final assembly in the United States. Leases, used vehicles, related-party loans, fleet sales, and salvage-title vehicles fail. See the full eligibility checklist and what is (and is not) deductible.

2. Gather the documents the IRS expects

The IRS newsroom page on filing under Working Families Tax Cuts says taxpayers claiming this deduction will need:

  • A lender statement showing qualified passenger vehicle loan interest paid for the year
  • The vehicle identification number and purchase details
  • Documentation that the vehicle is an applicable passenger vehicle for personal use (original use with you, listed vehicle type, GVWR under 14,000 pounds, U.S. final assembly)

For 2026 and later calendar years, that lender statement is often Form 1098-VLI when the lender received $600 or more of specified interest on one loan. For 2025, lenders had transition relief under Notice 2025-57 if they made a year’s interest statement available. Use this site’s VIN check only as a helper for the plant-of-manufacture reading; the dealer label also works.

3. Fill Schedule 1-A, Part IV

On the final 2025 Schedule 1-A:

  1. List each VIN on line 22.
  2. Put interest already deducted on Schedule C, E, or F in column (ii). Put the rest in column (iii).
  3. Add column (iii) on line 23. Line 24 is the smaller of that total or $10,000.
  4. Lines 25–29 apply the MAGI phase-out ($200 for each $1,000 or part of $1,000 over $100,000, or $200,000 if married filing jointly).
  5. Line 30 is the deduction for Part IV. The schedule total on line 38 goes to Form 1040 line 13b.

The June 16, 2026 draft Schedule 1-A moves Part IV to lines 28–36 and the total to line 44 (draft Form 1040 line 13a). The draft is marked “Do not file.” Follow the final 2026 form when the IRS publishes it. Line-by-line notes: Schedule 1-A guide, 2025 returns, 2026 filing season.

4. Estimate before you file

Use the free car loan interest deduction calculator on this site to apply the $10,000 cap and the Schedule 1-A MAGI phase-out in your browser. Nothing is filed for you. The phase-out examples show the rounding rules with worked numbers.

Common questions

Can I deduct the interest if I take the standard deduction?

Yes. Section 70203 of Public Law 119-21 amended section 63(b) so the deduction is available to people who do not itemize. The 2025 Form 1040 instructions say you can claim it whether you take the standard deduction or itemize on Schedule A.

What documents do I need to claim the car loan interest deduction?

The IRS says taxpayers claiming this deduction will need a lender statement showing qualified passenger vehicle loan interest paid for the year, the vehicle identification number and purchase details, and documentation that the loan bought an applicable passenger vehicle for personal use (new to you, listed vehicle type, GVWR under 14,000 pounds, and U.S. final assembly).

For calendar year 2026 and later, lenders that receive $600 or more of specified passenger vehicle loan interest on one loan generally send Form 1098-VLI. For 2025, Notice 2025-57 gave interest recipients transition relief if they made a statement of the year’s interest available. Keep your loan contract, payoff or amortization summary, and the dealer label or VIN plant record even if no Form 1098-VLI arrives.

How do I claim the car loan interest deduction on my tax return?

Complete Schedule 1-A, Part IV (“No Tax on Car Loan Interest”). Enter each VIN, subtract any interest already deducted on Schedule C, E, or F, apply the $10,000 cap, then apply the MAGI phase-out. Attach Schedule 1-A to Form 1040, 1040-SR, or 1040-NR. On a 2025 return the Schedule 1-A total goes to Form 1040 line 13b.

You must report the VIN for every year you claim the deduction. Without the VIN, the regulations say the interest is not treated as qualified. Use the free calculator on this site to estimate the capped and phased-out amount before you fill the form.

What is Form 1098-VLI?

Form 1098-VLI, Vehicle Loan Interest Statement, is the information return for specified passenger vehicle loan interest under section 6050AA. A person who receives $600 or more of that interest on one loan during the calendar year, in a trade or business, files a separate form for that loan.

For 2025, Notice 2025-57 gave interest recipients transition relief if they made a statement of the year’s interest available. The December 2026 instructions cover calendar year 2026 and later. Box 1 is interest received. Box 2d is the VIN. Box 6 is original use. Box 7 is U.S. final assembly. You can still claim a deduction you qualify for when the lender is not required to file, but keep the loan records and report the VIN.

What if my lender does not send Form 1098-VLI?

You can still claim a deduction you otherwise qualify for. Keep the loan agreement, a year-end interest statement or amortization schedule, proof of the VIN, and evidence of U.S. final assembly. Report the VIN on Schedule 1-A.

Lenders generally file Form 1098-VLI only when they receive $600 or more of specified passenger vehicle loan interest on one loan in a calendar year, and 2025 had transition relief. Missing the form does not create the deduction, and having the form does not prove every eligibility test is met.

Estimate your deduction

Sources