The Economic Times

Up to $10,000 IRS car loan interest tax deduction in 2026: are you eligible under new income limits and vehicle rules?

The IRS will allow up to $10,000 in car loan interest deduction starting with 2026 tax filings for the 2025 tax year. This new federal tax break applies to qualifying new vehicles purchased after December 31, 2024. Income limits apply. Single filers above $100,000 MAGI face phase-outs. Married couples above $200,000 do too. The vehicle must be U.S.-assembled and for personal use. Loans must be secured and new.