Qualified Passenger Vehicle Loan Interest Deduction
Who Is Eligible
- A taxpayer who pays interest on a loan for a new vehicle purchased for personal use during the year.
- The taxpayer must include the vehicle identification number (VIN) of the vehicle(s) on their tax return.
Requirements
- The vehicle loan originated after December 31, 2024.
- The loan must be secured by a lien on the vehicle.
- A “vehicle” includes a car, minivan, van, sport utility vehicle, pickup truck, or motor cycle intended for use on a road or highway.
- The vehicle must have at least two wheels.
- The gross vehicle weight rating must be less than 14,000 pounds.
- Final assembly of the vehicle must have been in the US.
- The sticker on the inside edge of the driver’s side door will have the needed information for an auto.
- The National Highway Traffic Safety Administration (NHTSA) has a VIN Decoder website that confirms the validity of the VIN and provides plant of manufacture information.
- There is no limit on the number of vehicles.
How to Report in TaxSlayer
- Federal → Deductions → Additional Deductions → No Tax on Car Loan Interest
- Box 1: VIN
- Box 2: Date of purchase
- Box 3: Interest deducted on Schedule C, E, or F
- Box 4: Interest being deducted on Schedule 1-A
Limitations
- Maximum annual deduction is $10,000, regardless of the number of qualifying vehicle loans
- The deduction phases out starting at MAGI of $100,000 ($200,000 for MFJ).
o The phase out is at a rate of $200 per full $1,000 above the MAGI threshold.
o MAGI is AGI increased for certain excluded foreign income.
- MFS does NOT disqualify and taxpayer does NOT need SSN.
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