02/18/2026
2026 Tax Savings Opportunity: Understanding the New $10,000 Tax Deduction on Auto Loans.
To qualify for the deduction, the interest must be paid on a loan used to purchase a passenger vehicle for personal use that meets all eligibility requirements.
Lease payments do not qualify and the maximum annual amount a taxpayer can claim for this deduction is $10,000.
The deduction also doesn’t apply equally to everyone.
It begins to phase out when a taxpayer’s modified adjusted gross income exceeds $100,000 for individuals or $200,000 for married couples filing jointly, meaning fewer high-income filers will benefit.
To count as “qualified interest,” the loan must:
Must have originated after Dec. 31, 2024
Be secured by the vehicle purchased
Be used to buy a vehicle the original use of which began with the taxpayer (so used cars don’t qualify)
Be for a vehicle intended for personal (not business) use
