Car Loan Interest Deduction

[BrannanRogers]

I purchased a new vehicle in 2025.  My bank said that I may qualify for deducting the interest.  I have not seen the option to enter this using Turbotax.  There is an option for registration fees; however, I live in Oregon and do not qualify for that.  Is this an option for Turbotax?

[Vanessa A]

Yes.  You can enter your car loan interest by selecting the following:

1. Deductions and credits
2. Cars and Other things you own
3. Start next to Car Loan Interest
4. You will need to enter the VIN and information from the lender

In order to claim this interest the following criteria must be met:

• The car was purchased not leased
• Final assembly occurred in the US
• It is NOT a business use, but was purchased for personal use
• It has a GVWR of less than 14,000lbs (car, truck, SUV, mini van or motorcycle)
• Loan was originated in 2025 and must be secured by a lien on the vehicle or the title
• Your income must be less than $100,000 if single or $200,000 if married filing jointly to receive the full deduction. 
•  If your income is over $150,000 if single or $250,000 if Married filing jointly, you are not eligible

Note:  The interest deduction is capped at $10,000.  This is an above the line deduction, not a credit meaning it will lower your AGI and taxable income.  It will not be an amount that is refunded to you, but it could result in a refund by lowering your taxable income.   

[jdearm]

TurboTax is obviously not highlighting this new deduction enough!   When you select Standard Deduction, there should then be a list of deduction questions based on that selection that you are still eligible for!

Thanks,   Jay D