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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