Updated November 5, 2026. Quick answer: Part IV of Schedule 1-A figures the 2025 deduction for qualified passenger vehicle loan interest, capped at $10,000. Line 22 lists each vehicle’s VIN and the interest, line 24 applies the cap, and lines 25 to 30 cut the deduction by $200 for each $1,000 (rounded up) that MAGI is over $100,000 ($200,000 if married filing jointly). Rounding goes up here, the opposite of Parts II and III.
For what changed on the 2026 draft of the schedule, see Schedule 1-A 2026 changes.
Schedule F (Form 1040) for 2025, line by line: Schedule F lines 10 to 15.
IRS worksheet walk-throughs: Form 1041 No Tax on Car Loan Interest Worksheet.
Who fills out Part IV
The schedule says “Fill out Part IV only if you, or your spouse if married filing jointly, paid or accrued qualified passenger vehicle loan interest (QPVLI).” The Instructions say the same: “Fill out Schedule 1-A, Part IV, only if you paid or accrued QPVLI in 2025.” The deduction can be taken with the standard deduction or itemizing. “You can’t deduct more than $10,000 of the QPVLI you paid or accrued in 2025.” The reduction starts above $200,000 of MAGI for married filing jointly and above $100,000 for all other filing statuses.
What interest qualifies
The loan must meet five tests. Per the Instructions: “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” and “Your loan is secured by a first lien on the purchased APV.” An APV is an applicable passenger vehicle, defined by five conditions including “The original use of the vehicle starts with you (a used vehicle does not qualify),” and “The vehicle has undergone final assembly in the United States.” Personal use means you expect to use it for personal purposes “for more than 50% of the time”. The loan amount can include “vehicle service plans, extended warranties, sales tax, and vehicle-related fees”, but not liability insurance, a trailer or negative equity from a trade-in.
The VIN rule
Without the vehicle identification number the deduction is not available: “In order to take the QPVLI deduction, you must include the vehicle identification number (VIN) of the purchased applicable passenger vehicle (APV)” on your tax return. Where final assembly happened, the Instructions say “You can rely on that information label.” (the dealer’s vehicle information label) or the plant of manufacture shown in the VIN. Refinanced loans can qualify: “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”.
Lines 22 to 24: the interest you report
| Line | What it asks |
|---|---|
| 22 | “Applicable passenger vehicle (see instructions). If more than two VINs, see instructions.” Columns: “Vehicle identification number (VIN)”, “Deducted on Schedule C, Schedule E, or Schedule F” and the Schedule 1-A amount |
| 23 | “Add lines 22a and 22b, column (iii)” |
| 24 | “Enter the smaller of the amount on line 23 or $10,000” |
Column (iii) is the part left after what you deducted elsewhere. “Column (iii) is the total QPVLI paid in 2025 less the amounts reported in column (ii).” You cannot deduct the same interest twice: “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.” For the interest items on those schedules see Schedule C lines 16a and 16b.
Lines 25 to 30: the income reduction
| Line | What it asks |
|---|---|
| 25 | “Enter the amount from line 3” |
| 26 | “Enter $100,000 ($200,000 if married filing jointly)” |
| 27 | “Subtract line 26 from line 25. If zero or less, enter the amount from line 24 on line 30” |
| 28 | “Divide line 27 by $1,000. If the resulting number isn’t a whole number, increase the result to the next higher whole number. (For example, increase 1.5 to 2, and increase 0.05 to 1.)” |
| 29 | “Multiply line 28 by $200” |
| 30 | “Qualified passenger vehicle loan interest deduction. Subtract line 29 from line 24. If zero or less, enter -0-” |
Rounding up means the first dollar over the threshold already costs a full step. Computed on an invented MAGI of $100,001 of MAGI gives $1 on line 27, 1 on line 28, $200 on line 29 and a deduction of $3,000 on $3,200 of interest (computed). At exactly $100,000 the line 27 amount is zero, so nothing is reduced and the deduction is $3,200 (computed).
Example with invented numbers
Illustration, not an IRS example. The taxpayer from the Part I page: single, MAGI $162,500, $3,200 of interest on one new vehicle’s loan, none deducted on another schedule.
| Line | Entry | Amount |
|---|---|---|
| 22a | VIN of the new vehicle, column (i) | invented VIN |
| 22a (ii) | Interest deducted on Schedule C, E or F, column (ii) | $0 |
| 22a (iii) | Interest on Schedule 1-A, column (iii) | $3,200 |
| 23 | Add lines 22a and 22b, column (iii) (computed) | $3,200 |
| 24 | Smaller of line 23 or $10,000 (computed) | $3,200 |
| 25 | MAGI from line 3 (Part I illustration) | $162,500 |
| 26 | Single filer | $100,000 |
| 27 | Line 25 minus line 26 (computed) | $62,500 |
| 28 | Line 27 divided by $1,000, rounded up (computed) | 63 |
| 29 | Line 28 times $200 (computed) | $12,600 |
| 30 | Line 24 minus line 29, not below zero (computed) | $0 |
The deduction is $0: 63 steps of $200 is $12,600, which is more than the $3,200 of interest.
A smaller overage: the same interest with a MAGI of $108,400 gives:
| Line | Entry | Amount |
|---|---|---|
| 25 | MAGI | $108,400 |
| 27 | Line 25 minus $100,000 (computed) | $8,400 |
| 28 | Rounded up to the next whole thousand (computed) | 9 |
| 29 | Line 28 times $200 (computed) | $1,800 |
| 30 | Line 24 ($3,200) minus line 29 (computed) | $1,400 |
So $1,400 is deductible there (computed).
Edition
This page reads Schedule 1-A (Form 1040) for 2025 and the Instructions for Form 1040 (2025), the files irs.gov served on 2026-11-05 (sha256 in the kit data). Line numbers belong to that edition, so check the label printed on the schedule in your own copy before you follow a line reference. The Instructions also cite Proposed Regulations section 1.163-16 for the replacement-vehicle and change-of-obligor rules; this page does not walk those.
Common mistakes
- Leaving out the VIN. The Instructions require it on the return for the deduction.
- Deducting interest on a used vehicle, a leased vehicle or a loan originated before 2025.
- Counting interest already deducted on Schedule C, E or F in column (iii) as well as in column (ii).
- Rounding line 28 down. Part IV rounds up, so one dollar over the threshold costs a full $200.
- Including negative equity rolled in from a trade-in or liability insurance in the loan amount.
Related: Schedule 1-A overview, car loan interest deduction 2026, and Form 1040 lines 14 and 15.
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Answer againSources
- Schedule 1-A (Form 1040), Additional Deductions (2025): https://www.irs.gov/pub/irs-pdf/f1040s1a.pdf
- Instructions for Form 1040 (2025), including the Instructions for Schedule 1-A: https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
Read from the IRS documents linked above on November 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.