Is auto loan interest the same as car loan interest for tax purposes?

Yes. The IRS treats them identically. The deduction applies to any qualifying motor vehicle loan regardless of what the lender calls it.

Can I deduct interest on a truck loan?

Yes, as long as the truck is new, assembled in the U.S., and used for personal (not business) purposes. Most major truck models like the F-150 and Silverado qualify.

What about auto loans from a credit union?

The source of the loan doesn't matter. Bank loans, credit union loans, and dealership financing all qualify, as long as the loan is secured by the vehicle.

Can I deduct interest on a leased vehicle?

No. The deduction only applies to purchased vehicles financed through a loan. Lease payments are not eligible.

Is Auto Loan Interest Tax Deductible?

Yes — auto loan interest became tax deductible starting in 2025 thanks to the One Big Beautiful Bill Act. If you purchased a new, U.S.-assembled vehicle after December 31, 2024, you can deduct up to $10,000 in annual loan interest from your federal taxes. This applies whether you call it a car loan, auto loan, or vehicle financing — the tax benefit is the same.

This calculator provides estimates only and should not be considered tax advice. Consult a qualified tax professional for your specific situation.

Based on the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. This deduction is available for tax years 2025-2028.

Auto Loan vs. Car Loan: Is There a Difference for Taxes?

No. The terms "auto loan" and "car loan" are interchangeable for tax purposes. The OBBBA deduction applies to any "qualified motor vehicle loan," which includes financing for cars, trucks, SUVs, and vans — as long as the vehicle meets the eligibility requirements. Whether your lender calls it an auto loan or a car loan makes no difference.

What Types of Auto Loans Qualify?

The deduction covers standard auto loans from banks, credit unions, and dealership financing. The loan must be secured by the vehicle itself (a first lien). Personal loans used to buy a car generally don't qualify because they're not secured by the vehicle. Lease payments also don't qualify — only traditional purchase financing.

If you refinanced your auto loan, the interest on the refinanced loan still qualifies as long as the original vehicle purchase met all requirements.

Trucks, SUVs, and Vans: Do They Qualify?

Yes. The deduction isn't limited to sedans. Pickup trucks, SUVs, crossovers, minivans, and other passenger vehicles all qualify — provided they meet the new vehicle and U.S. assembly requirements. Many popular trucks and SUVs like the Ford F-150, Chevrolet Silverado, Toyota Camry (assembled in Kentucky), and Honda Accord (assembled in Ohio) qualify.

Steps to Claim the Auto Loan Interest Deduction

Follow these steps to claim your deduction:

Step 1: Confirm your vehicle qualifies (new, U.S.-assembled, purchased after 12/31/2024)
Step 2: Keep your loan documents — you'll need them if questioned
Step 3: Wait for Form 1098-VLI from your lender at the start of tax season
Step 4: Report the interest on Schedule 1-A when filing your federal return
Step 5: Keep records for at least three years in case of an audit

Frequently Asked Questions

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