You can't deduct the payment — only the interest
The core rule: the deduction is for the interest on a qualifying car loan, not the whole payment and not the principal. On a typical loan the deductible interest is a fraction of what you pay each year.
What qualifies
- New vehicles only — the original use must begin with you; used cars don't qualify.
- US final assembly required — the car, van, SUV, pickup or motorcycle must be assembled in the United States. It's decided by the final-assembly point (check the VIN), not the brand.
- Personal use — business/fleet vehicles and leases are excluded.
- Loan taken after Dec 31, 2024 — older loans don't count.
The cap and the income phase-out
The deduction is capped at $10,000 of interest per year and phases out as income rises — starting at $100,000 (single) / $200,000 (married), and fully gone by $150,000 / $250,000. It applies to tax years 2025 through 2028.
Bottom line: a new, US-assembled vehicle bought with a loan after 2024 can give you an interest deduction — worth a few hundred dollars in tax for most people, not a write-off of your monthly payment.
Check if your loan qualifies →
Free tool: whether your vehicle qualifies, your first-year deductible interest, and what it's worth in tax.