Car Loan Interest Deduction: Does It Cover My Uber Car?

Mostly no. The new federal "no tax on car loan interest" deduction is for a vehicle bought for personal use. The IRS says the loan must be "for a personal use vehicle (not for business or commercial use)" (IRS FS-2025-03). A car you drive for Uber, Lyft or a taxi fleet is a business car for those miles. But you are not left with nothing. As a self-employed driver you can deduct the business share of your loan interest as a business expense on Schedule C, and that works even if you use the standard mileage rate (Pub 463).

This is general information, not tax advice.

Two different deductions for the same interest

Sources: IRS FS-2025-03, Pub 463 (2025), Schedule 1-A.

The personal-use requirement

The IRS fact sheet lists four loan conditions: originated after December 31, 2024; used to buy a vehicle "the original use of which starts with the taxpayer (used vehicles do not qualify)"; "for a personal use vehicle (not for business or commercial use)"; and secured by a lien on the vehicle. It also says lease payments do not qualify.

Many TLC drivers use one car for both work and family trips. The 2025 Schedule C instructions cover that case. If you are self-employed and use the vehicle for both, you may deduct the interest for the personal use on Schedule 1-A, and you can deduct only the part for business use on Schedule C (Schedule C instructions). You can't deduct the same interest twice. Your mileage log sets the split: Pub 463 says you can divide car expenses between business and personal use based on the miles driven for each. Pub 463's example: a car used 60% for business means 60% of the interest goes on Schedule C.

How much personal driving a TLC-plated car may do is a separate question. TLC rules on who may drive the vehicle are covered in can someone else drive my TLC vehicle?

Phase-out and the $10,000 cap

The new deduction is capped at $10,000 a year. On Schedule 1-A, Part IV, it is reduced by $200 for every $1,000 (or part of $1,000) that your modified AGI goes over $100,000 ($200,000 if married filing jointly) (Schedule 1-A, lines 24–30).

The VIN on your return

You must put the car's vehicle identification number on your return for every year you claim the new deduction. Schedule 1-A has a column for interest already deducted on Schedule C, so the two parts are shown separately. To check "final assembly in the United States," the IRS says you can use the vehicle information label at the dealer, or the plant of manufacture shown by the VIN through NHTSA's VIN decoder (IRS FS-2025-03).

Which applies to me?

What to do next

1. Get your lender's yearly interest statement. The IRS says lenders must report qualified interest to you.
2. Total your business miles and all miles from your log, and work out the business percentage.
3. Give both to your preparer, with your VIN and loan date.

A wheelchair-accessible taxi bought with a program loan has its own terms. See the ATLAS accessible taxi loan program. For other car costs, see can I deduct my TLC car rental?, the deductions list and the taxes hub.