A tax-deductible interest is an interest that can be subtracted from the total amount of tax you owe. The most common type of tax-deductible interest is the mortgage interest paid on a home or investment property. Other examples of tax-deductible interests include credit card interest, student loan interest, and auto loan interest. Before the Tax Reform Act of 1986, interest on consumer debt was tax-deductible. The Tax Reform Act of 1986 eliminated this deduction.