Part IV — Instruction 1040 — Instructions for Form

No Tax on Car Loan Interest

You may be able to claim a deduction if you and/or your spouse paid or accrued qualified passenger vehicle loan interest (QPVLI) (see Qualified passenger vehi- cle loan interest, later) in 2025. You can claim this deduction whether you claim the standard deduction or itemize deductions on Schedule A (Form 1040).

Fill out Schedule 1-A, Part IV, only if you paid or accrued QPVLI in 2025. VIN required on your return. In order to take the QPVLI deduction, you must include the vehicle identification number (VIN) of the purchased applicable passenger vehicle (APV) (see Applica- ble passenger vehicle, later) on your tax return. If you paid QPVLI allocable to multiple APVs, include the VIN of each APV.

If the purchased APV was replaced due to an unforeseen intervening event (for example, a defective APV was replaced under a state lemon law), include the VIN of the substitute APV. For more information, see Proposed Regulations section 1.163-16(c)(3)(ii). Maximum amount of deduction. You can’t deduct more than $10,000 of the QPVLI you paid or accrued in 2025.

The amount of the QPVLI deduction (after applying the $10,000 limit) is reduced if your MAGI is greater than the amount shown next to your filing status below.

^{Married filing jointly—$200,000.}
^All other filing statuses—$100,000.

Your MAGI is the amount on line 3 in Part I of Schedule 1-A.

Qualified passenger vehicle loan inter- est. To qualify for the QPVLI deduction, the interest must be paid or accrued on a loan that generally meets all the following requirements.

Your loan was originated after December 31, 2024.
The loan was originated by you.
The proceeds from your loan were used to purchase an APV (lease payments do not qualify).
Your APV is for personal use (which means you don’t expect it to be used predominantly for business or commercial use. See Personal use, later).
Your loan is secured by a first lien on the purchased APV.

Change in obligor by reason of pre- vious obligor’s death. The obligor on the loan is generally the person responsible for paying the loan. If a loan met requirements 1 through 5 at the time it was originated by a previous obligor, and you became the obligor by reason of a previous obligor’s death, interest paid by you on the loan is generally QPVLI if the loan continues to be secured by a first lien on the purchased APV. A change in obligor by reason of a previous obligor’s death could occur, for example, when you inherit an APV subject to a loan originated by the person who died. See Proposed Regulation section 1.163-16(d)(5).

Loan amount. Indebtedness that can be counted for purposes of determining QPVLI includes indebtedness incurred to finance the purchase price of the APV, as well as items or amounts that are customarily financed in an APV purchase transaction and that are directly related to the purchased APV. For example, this includes vehicle service plans, extended warranties, sales tax, and vehicle-related fees. Interest on items and services not customarily financed in an APV purchase transaction and that are directly related to the purchased APV, such as liability insurance, a trailer, or amounts representing debt on a vehicle traded in as part of the purchase transaction for the APV (so-called negative equity), is not eligible for the deduction.

Refinanced loan. If your prior loan that had QPVLI is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction, so long as the new loan is secured by a first lien on the APV with respect to which the refinanced loan was incurred. The loan amount is limited to the outstanding balance of the refinanced loan as of the date of the refinancing.

Applicable passenger vehicle. In general, an APV is any vehicle that meets the following conditions:

You are considered to have purchased your APV for personal use. Interest deducted elsewhere on your return instead of on Schedule 1-A. If some or all of the QPVLI qualifies to be deducted in more than one place on your return, you may choose where to report the deduction, but you cannot deduct the same amount more than once. For example, if you deducted some or all of the interest that you paid or accrued on your loan as interest on Schedule C, Schedule E, or Schedule F, then you can’t deduct that same interest as QPVLI on Schedule 1-A. Line 22. Enter the VIN(s) of the APV(s) on line 22, column (i). If you need to report more than two VINs, attach a statement to your return showing the information required on line 22.

Next, for each entered VIN, enter the QPVLI paid or accrued on the loan originated for the purchase of that APV. On line 22, column (ii), enter the amount of the QPVLI, if any, that was deducted elsewhere on your return (for example, on Schedule C, Schedule E, or Schedule F). On line 22, column (iii), enter the total amount of the QPVLI paid or accrued on the loan during the taxable year minus the amount on line 22, column (ii). Line 24. The amount on line 24 cannot be more than $10,000, the maximum amount of the QPVLI deduction. Line 27. If the amount on line 27 is zero or less, the amount of your QPVLI reported on line 24 is not reduced. Skip lines 28 and 29 and enter the amount from Schedule 1-A, line 24, on Schedule 1-A, line 30.

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