The OBBBA has introduced a new deduction for car loan interest paid for new cars you bought for personal use between 2025 and 2028.
The deduction is up to $10,000 if your income is under $100,000 (or $200,000 if MFJ). The deduction is gradually phased for higher incomes.
For the requirements of this deduction, please read this TurboTax Help article.
In TurboTax Online, you can enter your car loan deduction by following these steps:
- Open your tax return
- Click on Federal in the left-hand column, then on Deductions & Credits
- Navigate to the list of Deductions and Credits
- Click on Other Deductible expenses
- Locate the section Cars and Other Things You Own and click on the arrow on the right
- Click Start next to Car Loan Interest
- Follow the TurboTax questionnaire to enter your car loan interest
- The deduction will transfer to Schedule 1-A of your form 1040, which is then transferred together with other deductions such as the additional senior deduction, to line 13b of your form 1040.
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