Can You Deduct Student Loan Interest on Your Taxes in the U.S.?

Can You Deduct Student Loan Interest on Your Taxes in the U.S.?


If you're paying off student loans, there's a bit of good news:
You may be able to deduct up to $2,500 in student loan interest on your federal tax return.

Here’s how the deduction works, who qualifies, and what to watch for.

πŸŽ“ What Is the Student Loan Interest Deduction?

It’s an “above-the-line” deduction, meaning you can claim it even if you don’t itemize.

You can deduct:

  • Up to $2,500 per year in interest

  • From qualified student loans used for education expenses

✅ Who Qualifies?

You must:

  • Have paid interest on a qualified student loan in the tax year

  • Have a Modified Adjusted Gross Income (MAGI) under certain limits:

    • Full deduction if MAGI < $75,000 (single) or $155,000 (joint)

    • Phases out above that

You cannot be:

  • Claimed as a dependent

  • Married filing separately

🧾 What Is a Qualified Loan?

  • Loans taken out solely for qualified education expenses

  • Borrowed for you, your spouse, or a dependent

  • From a legitimate lender (not family or employer)

πŸ—‚️ What Documentation Do You Need?

You’ll receive Form 1098-E from your loan servicer
→ It shows how much interest you paid during the year
→ Use it to claim the deduction on Schedule 1 (Form 1040)

🚫 What Doesn’t Count?

  • Refinancing fees or capitalized interest

  • Loans from relatives or employer plans

  • Interest paid by someone else (if you’re not legally responsible)

πŸ“ Conclusion

If you’re paying down student loans, the IRS offers a small break in the form of the student loan interest deduction — even if you don’t itemize.

It won’t erase your balance, but every dollar helps.
Make sure you meet the qualifications and use Form 1098-E to claim your deduction correctly.


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