The Car Loan Interest Phaseout: $200 per $1,000 Over $100,000

The reduction is $200 for each $1,000 of modified AGI over the threshold, and a part of $1,000 counts as a whole one (IRC §163(h)(4)(C)). The threshold is $100,000, or $200,000 for married filing jointly. Married filing separately uses $100,000 and its own $10,000 cap.

Example

Joint MAGI of $214,600 is $14,600 over, which rounds up to 15 steps: the deduction drops by $3,000. With $10,000 or more of qualified interest the deduction is gone at $250,000 joint or $150,000 otherwise.

Last reviewed 2026-10-29. General information, not tax advice. Your lender's figures and a tax professional come first.