New Car loan interest deduction

[ramalavenu]

Turbo Tax deluxe not calculating car loan interest deduction properly.  It says congratulations you are saving on your taxes, but the amount is $0.   Please check and provide update.

Thank you,

Venu.

[Mike9241]

The calculation is done on Schedule 1-A part IV. This forum has no access to your return. If you modified adjusted gross income is too high you don't get the deduction

the loan must have originated after 2024.

the qualifying passenger vehicle must be for personal use. 

other rules apply

[ramalavenu]

Hello,

Car purchased and Loan initiated in March 2025.  Vehicle US built and qualified for deduction.

As per OBBA bill, $10000 interest deduction up to $200K AGI for MFJ.  This deduction will phase out for incomes between $200K to $250K.

Let's say my scenario, my AGI is $225K and paid $2400 interest.   do i get a break?    Turbo Tax deluxe showing $0 savings.

For the same scenario, if i use $5300 plus as interest paid then Turbo tax showing me savings with X amount.  So, my vehicle is qualified and income is not too high to get deduction.

Phaseout calculation Turbo tax doing is wrong.  I tried my scenario on Chat GPT, Co-pilot etc.. they are all showing i will get some deduction with Tax savings and they are saying Turbo tax phaseout calculation is wrong.

Please escalate this to your technical team.  I'm holding on Tax filing waiting for patch update but so far, no luck so i contacted Turbo Tax team.

Thank you,

Venu.

[RobertB4444]

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.