The car-loan interest deduction just got its paperwork: Form 1098-VLI and Schedule 1-A

The federal auto-loan-interest deduction — up to $10,000 a year, recurring, and the thing that replaced the purchase credit that ended 30 September 2025 — now has real tax-filing mechanics attached. From tax year 2026, lenders report qualifying interest on a new Form 1098-VLI, and you put the vehicle's VIN on Schedule 1-A. It's above-the-line, so you don't need to itemize to claim it. This is the news: not that the deduction exists (we've covered that), but that it now has a concrete paper trail.

Does a Fremont-built Model 3 actually qualify?

The eligibility rules are specific: the vehicle must be new, under 14,000 lb, final-assembled in the US, for personal use, bought after 2024-12-31 and before 2029-01-01. Used vehicles and leases are excluded entirely. The assembly-location check has a shortcut: a VIN starting with 1, 4 or 5 indicates US assembly, which is exactly what you'd expect on a Fremont-built Model 3. Check your own VIN's first digit before assuming — trim and plant can vary — rather than guessing from the model name alone.

The phase-out math, worked

The deduction phases out starting at $100,000 MAGI (single) or $200,000 (married filing jointly), shrinking 20% for every $10,000 over that threshold. Worked example: a single filer with $115,000 MAGI is $15,000 over the threshold — that's one full $10,000 increment plus a partial second one, which this deduction's step structure treats as two increments (any amount into a new $10,000 band counts), so 40% is cut from the cap. A $10,000 deduction cap becomes a $6,000 cap for that filer. Run your own MAGI against the same 20%-per-$10,000 formula rather than assuming the full $10,000 applies to you.

What to actually keep, now that there's a form for it

Once your lender starts issuing Form 1098-VLI for tax year 2026, that document — not your own interest calculations — is what you'll transfer to your return, alongside the VIN on Schedule 1-A. Keep both close to your other delivery paperwork; needing to reconstruct a missing 1098-VLI from monthly statements later is exactly the kind of paperwork problem the new form exists to prevent.

What this doesn't change

This is separate from your Tesla referral link, which is worth about $300 in free FSD (Supervised) trial value and confirms in the order summary before you pay — see the current benefit table. The deduction is a tax-time matter between you, your lender, and the IRS; it doesn't touch anything at checkout.