You can claim the deduction if all of the following apply:
- You paid interest during the tax year on a qualifying student loan
- Your filing status is NOT married filing separately
- You are legally obligated to pay interest on a qualified student loan
- Your modified adjusted gross income (MAGI) is less than a specific amount set annually
- Your or your spouse are not claimed as a dependent on someone else’s return
You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year.
What is a qualified student loan?
According to the IRS, "to be reportable for 2023, a student loan must be either:
- Subsidized, guaranteed, financed, or otherwise treated as a student loan under a program of the federal, state, or local government, or of a postsecondary educational institution; or
- Certified by the borrower as a student loan incurred solely to pay qualified higher education expenses. You may use Form W-9S to obtain the certification."
What are the income limits for eligibility?
For the 2023 tax year:
- If you are a single filer, the phase out begins at $75,000. You can't claim the deduction, if your MAGI is $90,000 or more.
- If you are married filing joint, the phase out begins at $155,000. You can't claim the deduction, if your MAGI is $185,000 or more.