OBBBA car loan interest MAGI phaseout examples (2025–2028)

These are illustrations, not advice and not a determination that any interest is allowed. AssemblyAlert never says a loan is deductible and never says a reader qualifies.

The IRS Working Families Tax Cuts pages describe a temporary deduction for tax years 2025 through 2028, capped at $10,000 of qualified passenger-vehicle loan interest, that phases out for MAGI over $100,000 ($200,000 joint). The illustrations below apply a $200 reduction for each $1,000 (or fraction) of MAGI over that IRS threshold. That slope reaches $0 at $150,000 single / $250,000 joint.

MAGI phaseout is only one gate. Even if an illustration shows “room” under the cap, the interest still has to clear every other IRS test: new vehicle (used vehicles do not qualify), lease payments do not qualify, personal use, lien-secured loan after December 31, 2024, US final assembly, GVWR under 14,000 pounds, and the VIN on the return.

How the illustration is computed

1. Start with the IRS annual cap of $10,000.
2. If MAGI is at or under the IRS start ($100,000 single / $200,000 joint), the illustrated reduction is $0.
3. If MAGI is over the start, count each $1,000 or fraction over the threshold and multiply by $200.
4. Illustrated room = $10,000 minus that reduction, never below $0.

The interest / cap estimator applies the same illustration with a MAGI slider. Plant-country, lease, new-vehicle, and loan-date gates are separate — [check the VIN](/).

Worked illustrations

Assume, for the math only, that qualified interest is at least $10,000 so the cap is the binding limit. If actual qualified interest is lower, the illustrated room cannot exceed that interest. None of these rows decide a return.

Filing	MAGI	Over the IRS start	Illustrated reduction	Room under the $10k cap
Single / most	$95,000	$0	$0	$10,000
Single / most	$120,000	$20,000	$4,000	$6,000
Single / most	$150,000	$50,000	$10,000	$0
Joint	$205,000	$5,000	$1,000	$9,000
Joint	$250,000	$50,000	$10,000	$0

Single, MAGI $95,000

$95,000 is under the IRS $100,000 start. Illustrated reduction is $0. Illustrated room under the cap is the full $10,000 — and only if every other gate is cleared. This page does not know that.

Single, MAGI $120,000

$20,000 over $100,000 is twenty $1,000 increments. 20 × $200 = $4,000 reduction. Illustrated room: $6,000.

Single, MAGI $150,000

$50,000 over $100,000 is fifty increments. 50 × $200 = $10,000. Illustrated room: $0.

Joint, MAGI $205,000

$5,000 over $200,000 is five increments. 5 × $200 = $1,000 reduction. Illustrated room: $9,000 — again only if the interest is otherwise qualified.

Joint, MAGI $250,000

$50,000 over $200,000 is fifty increments. Illustrated room: $0.

A $1 fraction over a thousand still counts as a full increment: MAGI $100,001 single is one increment ($200), not a free pass.

Other gates this page does not score

• Do auto leases qualify? — No. The IRS states that lease payments do not qualify.
• Was my car assembled in the US? — PlantCountry, not VIN position 1.
• 2025–2028 checklist
• How much is the deduction worth? — bracket illustrations, not MAGI math.
• What is Form 1098-VLI?
• Fact cards and the [VIN checker](/)

Chart: illustrated room vs MAGI

The navy line is single / most. The red line is joint. Both start at $10,000, begin falling after the IRS threshold, and hit $0 at $150,000 and $250,000. Open the MAGI slider to try other numbers.

Cite the IRS page. Not tax advice. Not affiliated with the IRS or NHTSA. Owned by Record of Sale, LLC.