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You Make the Call - Feb. 19, 2026

Published:
By: NATP Staff
Tax professional reviewing car loan documents and Form 1040 to determine OBBBA qualified passenger vehicle loan interest deduction eligibility

Question: Taylor bought a new car in 2025 (final assembly in the U.S.) using a loan originated after 12/31/2024. Taylor uses the car 80% for personal use and 20% for business use. Taylor wants to claim the One Big Beautiful Bill Act (OBBBA) qualified passenger vehicle loan interest (QPVLI) for all interest shown on the lender statement for his 2025 Form 1040 tax return.

Can Taylor deduct the interest?

Answer: Yes. The OBBBA car loan interest deduction applies to a vehicle used primarily for personal use (generally, more than 50% personal use based on the taxpayer’s intent at the time the loan was originated). The vehicle may have some business use and still qualify, provided it is purchased for personal use.

This framing supports a binary eligibility test (personal-use vehicle) rather than a “prorate it between personal and business use” approach. So, if a vehicle is not primarily for personal use (i.e., it’s used more than 50% in a trade/business), it generally would not meet the “purchased for personal use” requirement for this specific deduction.

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NATP Staff

The NATP team is dedicated to supporting tax professionals with expert insights, industry updates and resources that help them serve their clients with confidence.

Information included in this article is accurate as of the publication date. This post does not reflect tax law changes or IRS guidance that may have occurred after the publishing date.