In short: on a co-signed or jointly-held auto loan, the person who can claim the car loan interest deduction is generally the one who is legally liable on the loan, actually paid the interest, and owns and uses the vehicle for personal purposes. A co-signer who doesn't own or use the car usually can't deduct interest they didn't pay on a car that isn't theirs.
Shared loans are where "who gets the deduction" gets murky. The tests are the same as always — new, personal use, US-assembled, 2025–2028 loan, under the income phase-out — but the extra question is whose deduction it is.
The three things that usually decide it
For a deduction, tax rules generally look for a combination of:
- Legal liability — you're obligated on the loan.
- Actual payment — you paid the interest.
- Ownership and use — it's your vehicle, used for personal purposes.
The person who lines up all three has the strongest claim. The same interest can only be deducted once, so co-borrowers can't both deduct the full amount.
Common situations
Parent co-signs for a child. If the parent co-signs but the child owns, uses, and pays for the car, the deduction generally follows the child (assuming the child is liable and the other tests are met). A parent who merely co-signed, doesn't own or use the vehicle, and didn't pay the interest typically has no deduction. If the parent actually owns, uses, and pays, the analysis shifts to them.
Two spouses on one loan. Whoever owns, uses, is liable, and paid generally claims it, on their return. Filing jointly, it's on the joint return; filing separately, it belongs to the qualifying spouse — see married filing separately .
Two unrelated co-borrowers. They can't both deduct the same interest. If they split the payments on a shared, co-owned personal vehicle, the allocation is fact-specific and worth confirming with a tax professional.
Don't forget the vehicle still has to qualify
None of this matters unless the car itself passes the tests. It must be new, for personal use, assembled in the US, financed with a 2025–2028 loan, and the claimant's income must be under the phase-out . Decode the VIN and run the numbers first.
Frequently asked questions
I co-signed my child's car loan. Can I deduct the interest?
Usually not, if your child owns, uses, and pays for the car. The deduction generally follows the person who is liable, pays the interest, and owns and uses the vehicle. Merely co-signing doesn't give you the deduction.
Can both borrowers on a joint loan deduct the interest?
No — the same interest can't be deducted twice. On a shared, co-owned personal vehicle where both pay, the deduction is allocated between them based on the facts; confirm the split with a tax professional.
My name is on the loan but my spouse drives and pays for the car. Who deducts it?
Generally the spouse who owns, uses, is liable, and pays. On a joint return it lands on the joint return either way; filing separately, it belongs to the qualifying spouse.
Does a co-signer's income count toward the phase-out?
The phase-out applies to the return of whoever actually claims the deduction. If the co-signer isn't claiming it, their income isn't what's tested.
This is general information, not tax advice. Who may claim interest on a shared loan is fact-specific — confirm your situation with a tax professional. Figures reflect the OBBBA car loan interest deduction for tax years 2025-2028.
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