Deduct up to $2,500 annually
If your modified adjusted gross income is less than $75,000 ($150,000 if filing a joint return) there is a special deduction allowed for interest paid on a student loan.
You can take this deduction only if all the following apply.
- You paid interest in the tax year on a qualified student loan.
- Your filing status is any status other than married filing separately.
- Your modified adjusted gross income (AGI) is less than:
- $75,000 if single, head of household, or qualifying widow(er)
- $150,000 if married filing jointly
- You or your spouse if filing jointly, are not claimed as a dependent on someone's (such as your parent's) return.
The student loan interest deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040).
Student Loan Interest Deduction at a Glance
Do not rely on this table alone. See the IRS website for complete details.
| Feature | Description |
|---|---|
| Maximum benefit | You can reduce your taxable income by up to $2,500 |
| Loan qualifications | Your student loan: |
|
must have been taken out solely to pay qualified education expenses, and |
|
|
cannot be from a related person or made under a qualified employer plan or a contract purchased under such a plan. |
|
| Student qualifications |
The student must be: you, your spouse, or your dependent enrolled at least half-time in a degree, certificate, or other program leading to a recognized educational credential at an eligible school. |
| Time limit on deduction | You can deduct interest paid during the remaining period of your student loan. |
| Phase-out | The amount of your deduction depends on your income level. |
Required forms:
- 1098-E (provided by the lender)
- 1040, line 33 or 1040A, line 18
Note: the above information was adapted from the IRS website. For complete details on the following tax benefits, refer to the IRS website or consult your tax advisor.
