Car Loan & Auto Loan Calculator
Payment, Interest and the New Tax Deduction
Work out your monthly car payment and total interest — and how much the new car loan interest deduction (2025–2028) gives back, year by year.
Read the full answer — method, rates and figures
Quick answer: A car loan payment depends on the amount financed, the APR and the term. Financing $39,000 — a $40,000 car plus 6.25% sales tax and $500 of fees, less $4,000 down — at 7% for 60 months costs $772.25 a month and $7,335 in interest.
Stretching it to 84 months lowers the payment to $588.61 but raises the interest to $10,444. New for 2025 to 2028: if the car is new, assembled in the United States and for personal use, the interest is deductible up to $10,000 a year under 26 U.S.C. §163(h)(4), whether or not you itemize, phasing out above $100,000 of income ($200,000 joint).
For a single filer earning $85,000, that returns about $1,094 of federal tax on this loan through 2028, the last year the deduction exists.
How much will my car payment be?
$39,000 financed at 7% for 60 months is $772.25 a month and $7,335 of interest. If the car qualifies for the new interest deduction, a single filer earning $85,000 gets about $1,094 of that back.
Monthly payment
$772.25
Total interest
$7,335
Tax saved (to 2028)
$1,094
Interest after tax
$6,241
Your loan
- Sales tax$2,500
- Amount financed$39,000
- 60 payments of $772.25$46,335
- of which interest$7,335
- Interest after the deduction$6,241
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Monthly payment
$772.25
Amount financed
$39,000
Total interest
$7,335
Tax saved (to 2028)
$1,094
See every 2026 deduction on Schedule 1-A — overtime, tips, seniors and car loan interest — with the no tax on overtime calculator. To check what the payment does to each paycheck, try the paycheck calculator.
Last reviewed 13 October 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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The amount financed is the price plus sales tax (on the price less your trade-in) and any fees you roll in, minus your down payment and trade-in. It is amortized monthly at APR ÷ 12, so each payment covers that month's interest and pays down the rest.
The deduction is worked out for each calendar year from the interest actually paid in it, capped at $10,000 and reduced by $200 for each $1,000 or part of $1,000 of income over the threshold, exactly as Schedule 1-A Part IV does. It stops after 2028. Tax saved uses the 2026 brackets and standard deduction for every year, because later years' tables are not published yet — treat it as an estimate.
Sources: 26 U.S.C. §163(h)(4) and IRS Schedule 1-A (Form 1040), Part IV; 2026 brackets from Rev. Proc. 2025-32.
The car loan interest deduction, year by year
| Year | Interest paid | Deduction | Tax saved |
|---|---|---|---|
| 2026 | $673 | $673 | $148 |
| 2027 | $2,397 | $2,397 | $527 |
| 2028 | $1,901 | $1,901 | $418 |
| 2029 | $1,368 | ended | $0 |
| 2030 | $797 | ended | $0 |
| 2031 | $198 | ended | $0 |
Assumes first payment in October 2026. The deduction ends after 2028 under current law.
Longer term, lower payment, more interest
| Term | Monthly | Interest | After tax |
|---|---|---|---|
| 36 mo | $1,204.21 | $4,351 | $3,462 |
| 48 mo | $933.90 | $5,827 | $4,810 |
| 60 mo | $772.25 | $7,335 | $6,241 |
| 72 mo | $664.91 | $8,874 | $7,729 |
| 84 mo | $588.61 | $10,444 | $9,263 |
How to use this calculator
- Enter the car price, your down payment and any trade-in.
- Add your state's sales tax rate and any fees rolled into the loan.
- Enter the APR and choose the term.
- If the car is new, US-assembled and for personal use, tick the deduction box and enter your income and filing status.
- Read the monthly payment, total interest, the tax the deduction returns each year, and how other terms compare.
❓ Frequently Asked Questions
How is a car loan payment calculated?
The lender amortizes the amount financed — price plus sales tax and fees, minus your down payment and trade-in — over the term at the monthly rate (APR ÷ 12). In the example, $39,000 at 7% over 60 months is $772.25 a month, $7,335 of interest over the loan.
Is car loan interest tax deductible in 2026?
Yes, for qualifying loans, from 2025 through 2028. The One Big Beautiful Bill Act added 26 U.S.C. §163(h)(4): interest on a loan taken out after 2024 for a new car, SUV, van, pickup or motorcycle whose final assembly was in the United States, bought for personal use and secured by the vehicle, is deductible up to $10,000 a year on Schedule 1-A.
You do not need to itemize. Used cars, leases and business vehicles do not qualify, and you must report the VIN.
Who loses the car loan interest deduction?
It phases out by $200 for every $1,000 — or part of $1,000 — of modified adjusted gross income above $100,000 ($200,000 married filing jointly). So a single filer with $3,000 of interest gets nothing once income passes about $115,000.
Enter your income above to see your figure.
Is a longer car loan worth the lower payment?
Rarely. In the example, going from 60 to 84 months cuts the payment by $183.63 a month but adds $3,109 of interest, and a long loan on a depreciating car makes it more likely you will owe more than the car is worth for years.
Should I include sales tax and fees in the loan?
Most buyers do, but you then pay interest on them for the whole term. In most states sales tax is charged on the price minus your trade-in, which is one reason a trade-in is worth more than its dollar value.
Check your state's rule and enter your own rate.
How does the deduction change the real cost of my loan?
It works like a partial interest rebate at your tax bracket. For the single filer earning $85,000 in the example (22% bracket), about $1,094 of the $7,335 in interest comes back through 2028; the interest paid after that is not deductible under current law.
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Further Reading
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