Eligible borrowers can reduce their taxable income by up to $2,500 through the student loan interest deduction, which applies to interest paid on qualified student loans. For 2024 and 2025, the deduction remains available to individuals and married couples within certain income limits, with a phase-out beginning at higher earnings. Unlike some other deductions, this one is available even to those who do not itemize. However, eligibility depends on factors such as modified adjusted gross income (MAGI) and whether the loan was used for qualified educational expenses.
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Get Started NowWhat Is the Student Loan Interest Deduction?
The student loan interest deduction allows eligible taxpayers to reduce their taxable income by up to $2,500 based on interest paid on qualified student loans. This deduction applies to loans taken out for higher education expenses, including tuition, fees and necessary supplies. Unlike some deductions, it is an above-the-line deduction, meaning taxpayers can claim it without itemizing.
For 2024, the deduction begins to phase out for single filers with MAGI of more than $85,000 ($170,000 for joint filers) and disappears entirely at $100,000 ($200,000 for joint filers). For 2024, the deduction phase-out for single filers starts at $80,000 ($165,000 for joint filers) and disappears entirely at $95,000 ($195,000 for joint filers).
2025 Student Loan Interest Deduction Income Limits
| Deduction Amount | Single Filers (MAGI) | Joint Filers (MAGI) |
|---|---|---|
| Full $2,500 Deduction | $85,000 and under | $170,000 and under |
| Partial Deduction | More than $85,000 but less than $100,000 | More than $175,000 but less than $200,000 |
| No Deduction | $100,000 and over | $200,000 and over |
2024 Student Loan Interest Deduction Income Limits
| Deduction Amount | Single Filers (MAGI) | Joint Filers (MAGI) |
|---|---|---|
| Full $2,500 Deduction | $80,000 and under | $165,000 and under |
| Partial Deduction | More than $80,000 but less than $95,000 | More than $165,000 but less than $195,000 |
| No Deduction | $95,000 and over | $195,000 and over |
To qualify, the loan must be in the taxpayer’s name, and they cannot be claimed as a dependent. The deduction reduces taxable income but does not provide a direct tax credit. Those making payments on student loans should review their IRS Form 1098-E, which reports interest paid, to determine eligibility. Understanding these income thresholds can help borrowers anticipate potential tax benefits while repaying student loans.
Which Student Loans Qualify and Which Don’t?
To claim the student loan interest deduction, the loan must have been taken out solely to pay for qualified education expenses at an eligible institution. Federal student loans, such as Direct Loans, PLUS Loans and Perkins Loans, as well as private student loans from banks or credit unions, generally qualify. Loans must be in the taxpayer’s name, and the borrower cannot be claimed as a dependent.
Personal loans, credit card debt and home equity loans used to pay for education expenses do not qualify. Additionally, loans from family members or employer-sponsored educational assistance programs are ineligible. If a loan is refinanced or consolidated, the new loan still qualifies as long as it was used for educational purposes. However, if additional non-educational debt is included in the refinancing, the interest on that portion cannot be deducted.
Borrowers should check their loan agreements and confirm that their lender reports interest payments on Form 1098-E. This ensures that only qualified student loan interest is included when claiming the deduction.
Qualifying Education Expenses and Eligibility
Educational expenses must meet certain qualifications in order to qualify for this deduction. Qualified education expenses can include:
- Tuition
- Room and board
- Books, supplies and equipment
- Transportation
- Fees
If you are single, you are eligible for the student loan interest deduction if you file as a single person, head of household or as a qualifying widow(er). If you are married, you are eligible if you file a joint return. You are not eligible if you are married, filing separately. You can’t be listed as a dependent on someone else’s return. If your child has completed the loan applications, you aren’t eligible even if you make the payments.
How to Calculate and Claim Your Student Loan Interest Deduction
As the tables above show, the student loan interest deduction is subject to income phase-outs, meaning those with higher incomes may receive only a partial deduction or none at all.
For example, suppose Alex, a single filer with a MAGI of $90,000 in 2025, paid $2,500 in student loan interest. Since her income falls between the phase-out range of $85,000 to $100,000, the deduction is partially reduced. Using the IRS phase-out formula, Alex can only deduct a portion of the $2,500, lowering her taxable income accordingly.
Now consider Jamie, a single filer earning $102,000 in 2025. Since Jamie’s MAGI exceeds the $100,000 threshold, he’s completely ineligible for the deduction, regardless of how much interest they paid.
To estimate eligibility, borrowers can use IRS worksheets or tax software to apply the phase-out formula. Reviewing Form 1098-E, which reports annual interest payments, helps ensure accurate calculations. Depending on your loans, you may receive more than one Form 1098-E. Any lender to whom you paid $600 or more in interest in 2024 or 2025 is required to send you this form.
When filing your taxes, enter the interest amount on Schedule 1 of Form 1040 under “Adjustments to Income.” If using tax preparation software, the program will typically prompt you to input your student loan interest and apply any necessary reductions. Keeping accurate records of loan payments and reviewing your Form 1098-E ensures you claim the correct deduction. If you’re unsure whether you qualify, consulting a tax professional can help clarify your eligibility and maximize any potential tax benefits.
Bottom Line
The student loan interest deduction is valuable to taxpayers with student loan debt. That’s because it is a deduction written off before your AGI is calculated. You get the benefit of the full deduction to which you are entitled. Individuals who do not itemize their deductions also receive the full benefit of the student loan interest deduction to which they are entitled.
Tips on Filing Your Taxes
- A financial advisor can help you identify all of the right deductions for your own tax situation. Finding a financial advisor doesn’t have to be hard. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Want to see what you could owe this year? Use SmartAsset’s free income tax calculator.
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