The Student Loan Interest Deduction allows eligible taxpayers to deduct up to $2,500 of interest paid on qualified student loans. This deduction can reduce your taxable income, even if you do not itemize deductions.
Eligibility Requirements
You may claim the student loan interest deduction if all of the following apply:
- You paid interest on a qualified student loan during the tax year.
- Your filing status is not "Married Filing Separately."
- You are legally obligated to pay the interest on the loan.
- Your Modified Adjusted Gross Income (MAGI) is below the annual student loan deduction income limit.
- Neither you nor your spouse (if filing jointly) is claimed as a dependent on another person’s tax return.
What Is a Qualified Student Loan?
According to the IRS, a qualified student loan must meet one of the following criteria:
- It is subsidized, guaranteed, financed, or otherwise treated as a student loan under a program of the federal, state, or local government, or a postsecondary educational institution.
- It is certified by the borrower as a loan incurred solely to pay qualified higher education expenses. (Form W-9S may be used for certification.)
Student Loan Tax Deduction Income Limit for 2024
The income limit for student loan interest deduction is based on your MAGI and filing status. The deduction is subject to a phaseout as your income increases:
Single Filers:
- Phaseout begins at $80,000 MAGI.
- Deduction is completely phased out at $95,000 MAGI.
Married Filing Jointly:
- Phaseout begins at $165,000 MAGI.
- Deduction is completely phased out at $195,000 MAGI.
If your income exceeds these thresholds, you may not be eligible for the deduction. This is referred to as the phaseout of student loan interest deduction.