The math for the phase out on this deduction does appear to zero it out at $225,000 if it is below a certain amount. The way the phase out on this one works-
1. Take the amount over the threshold (in your case $25,000)
2. Divide it by $1000 increasing to the next whole number if the result is not a whole number (in your case 25)
3. Multiply that result by $200 (in your case $5,000)
4. Subtract that number from the interest paid (in your case the result is now zero)
So while the phase out does go all the way up to $250,000 it requires a higher and higher amount of interest paid to stay in the deduction at that point.
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