In short: the car loan interest deduction is available whatever your filing status, but married filing separately (MFS) usually treats you less generously than filing jointly. The joint phase-out starts at $200,000 modified AGI; separate filers don't get that joint headroom, so a couple splitting their return can lose part or all of the deduction they'd keep together.
Filing status rarely decides whether a car qualifies — that's the VIN and the new/personal-use tests — but it can decide how much of your interest survives the income phase-out.
How the phase-out interacts with filing status
The deduction caps at $10,000 of interest a year and phases out as income rises: it begins shrinking above $100,000 modified AGI for single filers and $200,000 for joint filers. Filing jointly, a married couple measures against that higher $200,000 starting point on one combined return.
When you file separately, you don't share that joint threshold — each spouse files their own return against a lower measure. For a couple whose combined income sits comfortably under $200,000 jointly, splitting the return can push one or both spouses into the phase-out range they'd have avoided together. That's the core reason MFS is often the worse choice for this particular deduction.
Why couples still sometimes file separately
MFS exists for good reasons — separating liability, income-driven student-loan calculations, or a spouse's specific situation. If one of those reasons applies to you, the car loan interest deduction is one more line item to weigh in the trade-off, not usually the deciding factor by itself.
The practical move: model it both ways. Compare your total tax filing jointly versus separately, with the car loan interest deduction included in each scenario, and see which comes out ahead overall.
Which spouse claims it?
Generally the spouse who is legally liable on the loan and paid the interest, on a vehicle they own and use, is the one who claims it on their return. Two spouses can't both deduct the same interest. If the car and loan are shared, see the co-signer and joint-loan guide .
Frequently asked questions
Can I claim the car loan interest deduction if I file married filing separately?
Yes, filing status doesn't disqualify you. But the phase-out is less favorable than filing jointly, so more of your interest may be reduced or eliminated by the income limits.
Is the phase-out threshold for MFS half of the joint amount?
MFS filers don't get the $200,000 joint headroom, and separate-filer thresholds for income-based benefits are frequently lower. Because the exact MFS treatment can be nuanced, model your specific numbers or confirm with a tax professional rather than assuming a clean halving.
Should we file jointly just to get this deduction?
Not on this deduction alone — but include it when you compare joint versus separate. Run your total tax both ways; if MFS is costing you the car loan interest deduction and there's no offsetting reason to file separately, joint is often better overall.
Can both spouses each deduct their own car's interest?
If each spouse has their own qualifying vehicle and loan and each is liable and paying, each can deduct their own interest — but never the same interest twice. Income phase-outs still apply to each.
This is general information, not tax advice. Married-filing-separately rules have specifics that depend on your full return - compare both filing statuses or consult a tax professional. Figures reflect the OBBBA car loan interest deduction for tax years 2025-2028.
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