Can You Deduct Auto Loan Interest from Your Taxes
Auto loan interest can add up to quite a bit over time, so you might wonder if this charge is tax deductible. After all, interest on student loans is deductible under certain circumstances, and so is interest up to a certain amount on homes. If you're reviewing your personal finance for deductibles to provide a bit of a tax break, you'll want to know the following about car loan finance and tax deductions.
Past Precedence and Change
Up until 1986, it was possible for auto loan interest to be tax deductible. During Ronald Reagan's time in office, he reformed tax laws so that auto loan interest can no longer be tax deductible. Therefore, the quick and easy answer to the question is "no." However, some other loan-related expenses are deductible, so don't stop at auto loans when searching for deductions.
You can't get a tax deduction on interest from auto loans, but mortgages and student loans do allow you to take a tax break under certain conditions. When repaying student loans, interest is tax deductible provided that you do not file separately while being married; your modified adjusted gross income is below 70,000 dollars annually (or, if you are married, your joint income must be less than 145,000 dollars); and neither you nor your spouse are dependants. Interest from mortgage payments is tax deductible if the loan is secured on a first or second home.
Unfortunately, auto loan interest no longer qualifies to be deducted from your taxes. However, you can still get a bit of a tax break if you have a mortgage on a first or second home, or if you are repaying student loans.