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Income limits and the phase-out
The deduction shrinks as income rises and disappears entirely at higher incomes. Here’s exactly how the phase-out works.
| Filing status | Phase-out begins (MAGI) | Fully gone (MAGI) |
|---|---|---|
| Single | $100,000 | $150,000 |
| Married filing jointly | $200,000 | $250,000 |
Begin thresholds: IRS. End thresholds: Thomson ReutersRSM US (not stated on the IRS fact sheet).
The math
Your $10,000 cap is reduced by $200 for every $1,000 of MAGI above your threshold. Thomson Reuters That’s 20% of the excess, which exactly exhausts the cap over a $50,000 band. The phase-out reduces the cap, not your interest — if your actual interest is below the reduced cap, you may be unaffected.
Example (IRS/Thomson Reuters): Married filing jointly with MAGI of $205,000 is $5,000 over the $200,000 threshold → cap reduced by 5 × $200 = $1,000 → $9,000 maximum deduction. Thomson Reuters
MAGI is your AGI plus a few foreign-income add-backs (ยงยง911/931/933) — for most U.S. taxpayers, MAGI ≈ AGI.
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Unsettled: the IRS has stated the single and joint thresholds, but not head-of-household or married-filing-separately figures — don’t assume them until final regulations. Also, one think-tank describes a ‘10% rate’ that conflicts with the $200-per-$1,000 figure used by the major tax firms; we use $200/$1,000.