New Car-Loan Interest Deduction Gets Real Paperwork
By David · Published · Updated
The federal auto-loan interest deduction that replaced the old EV purchase credit now has real tax forms attached to it — Form 1098-VLI and Schedule 1-A. Here's who actually qualifies, and how it stacks with a referral code order.
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The deduction, as it actually works
Since the $7,500 federal purchase credit ended (for vehicles delivered after September 30, 2025), the closest federal replacement is a recurring deduction: up to $10,000 a year in qualified auto-loan interest, for loans on vehicles bought after December 31, 2024 and before January 1, 2029. Unlike the old purchase credit, it doesn't disappear at delivery — it applies fresh each tax year you're paying qualifying interest.
Who actually qualifies
- The vehicle must be new (not used), under 14,000 lb, for personal use, and finally assembled in the US.
- Used vehicles and leases do not qualify — you need an actual auto loan on a new car.
- Bought after December 31, 2024 and before January 1, 2029.
The assembly-location test is the one worth checking rather than assuming: a VIN starting with 1, 4, or 5 indicates US final assembly, and a Fremont-built Model 3 clears that bar. I'd check the actual VIN on your specific order rather than assume every Model 3 is Fremont-built by default.
The phase-out, in plain terms
The deduction shrinks once your modified adjusted gross income (MAGI) passes $100,000 (single) or $200,000 (married filing jointly) — it drops 20% for every $10,000 you're over that threshold. It's above-the-line, meaning you don't need to itemize to claim it, which is a lower bar than most deductions.
What's actually new: the paperwork
Starting with tax year 2026, this stops being a figure you calculate yourself from a loan statement. Lenders will report qualifying interest on a new Form 1098-VLI, and the vehicle's VIN goes on a new Schedule 1-A when you file. That gives the IRS a standard documentation trail for this deduction instead of relying on a self-reported number with nothing behind it. If you're financing a qualifying Tesla in 2026, expect a 1098-VLI from your lender around tax time — and don't skip entering the VIN on Schedule 1-A, since that appears to be how the deduction gets tied to the specific vehicle.
How this stacks with a referral order
These sit on different shelves entirely — one's federal tax policy, the other's a manufacturer program — but a buyer ordering a qualifying, US-assembled Model 3 or Model Y through a referral link can genuinely stack: the loan-interest deduction (if you finance and clear the assembly and income tests), plus the referral code's 3-month FSD trial (about $297), plus whatever state-level incentive applies where you live. None of the three reduce each other — losing eligibility for one (say, your MAGI clears the phase-out) doesn't touch the other two.
What I'd check before you file
Confirm your VIN's first digit before assuming assembly-location eligibility, ask your lender directly whether they'll issue a 1098-VLI for your loan (this is new enough that I wouldn't assume every lender's systems are ready for it), and run your own MAGI against the $100,000/$200,000 thresholds before counting on the full $10,000 figure — the phase-out can reduce it well before you'd expect.
For the full mechanics of where the code goes and when, see how the referral program works.
Disclosure: I'm an independent Tesla owner writing this myself. This site is not affiliated with, endorsed by, or operated by Tesla, Inc. If you eventually order through the referral link in the site header or footer I may earn Tesla Credits — that costs you nothing and changes nothing about your benefit.