You can deduct up to $2,500 of student loan interest paid during the tax year, but only if your income falls below a certain threshold

The student loan interest deduction lets you subtract interest you paid on may have access to student loans from your taxable income. This is different from a tax credit — it reduces the amount of income the IRS taxes, rather than reducing your tax bill directly. You claim it on Form 1040 or Form 1040-SR, on the line labeled "Student loan interest deduction."

The maximum deduction is $2,500 per tax year. If you paid less than that in interest, you deduct what you actually paid. The catch is that this deduction phases out — it disappears entirely — if your Modified Adjusted Gross Income (MAGI) exceeds certain limits. For the 2024 tax year, those limits are $75,000 for single filers and $155,000 for married filing jointly. The phase-out range is $15,000 wide for each filing status, meaning the deduction is completely gone at $90,000 for single filers and $170,000 for married filing jointly.

Key Takeaways

  • You can deduct up to $2,500 of student loan interest each year if your MAGI is below the income threshold for your filing status.
  • The deduction applies only to interest, not principal payments, and only on loans taken out to pay for your own education or your dependent's education.
  • Parent PLUS loans and private student loans both may have access to, as long as the loan was used for may have access to education expenses.
  • You do not need to itemize deductions to claim the student loan interest deduction — you can take it even if you take the standard deduction.
  • If your income is above the phase-out range, you cannot claim any deduction that year, even if you paid thousands in interest.

What counts as a may have access to student loan

A may have access to student loan is any loan you took out solely to pay for may have access to education expenses at an accredited school. may have access to expenses include tuition, fees, room and board, books, supplies, and equipment required for enrollment or attendance. The school must be may be able to access to participate in federal student aid programs — this includes most colleges, universities, and trade schools, but not all online programs.

Federal loans may have access to: Direct Loans, Stafford Loans, Perkins Loans, and Grad PLUS loans all work. Parent PLUS loans may have access to if they are in your name (not your parent's name). Private student loans also may have access to as long as they were used for education expenses and the lender is not a related person — meaning you cannot deduct interest on a loan from a family member.

Loans that do not may have access to include those used for living expenses beyond what the school allows, loans from employers, and loans from family members. If you refinanced a federal loan into a private loan, the private loan still qualifies as long as it was used for education expenses.

How to calculate your Modified Adjusted Gross Income

Your MAGI for the student loan interest deduction is usually your Adjusted Gross Income (AGI) — the number at the bottom of page 1 of your Form 1040. For most people, AGI and MAGI are the same. You can find your AGI on line 11 of Form 1040 for the 2024 tax year.

In rare cases, MAGI is higher than AGI. This happens if you have certain types of income that the IRS adds back in for this calculation only. These include foreign earned income, foreign housing exclusions, and exclusions for Puerto Rico residents. Unless you have one of these specific situations, your MAGI is your AGI.

Once you know your MAGI, compare it to the income limits for your filing status. If you are single and your MAGI is $75,000 or less, you can claim the full $2,500 deduction (or the amount you actually paid, whichever is less). If your MAGI is between $75,000 and $90,000, your deduction is reduced. If your MAGI is $90,000 or more, you cannot claim any deduction.

Interest only — not principal payments

The deduction covers only the interest portion of your loan payments, not the principal. When you make a student loan payment, part of it goes toward interest and part goes toward the principal balance. Only the interest part is deductible.

Your loan servicer sends you a Form 1098-E each January showing the interest you paid during the previous year. This form lists the total interest paid in box 1. Use this number to calculate your deduction — do not guess or use your total payment amount. If you did not receive a Form 1098-E but you know you paid student loan interest, contact your servicer and ask for it. You can also call the IRS at 800-829-1040 if the servicer does not send it.

If you paid less interest than the $2,500 maximum, you deduct only what you paid. For example, if your Form 1098-E shows $1,800 in interest and your income is below the phase-out range, you deduct $1,800, not $2,500.

Income phase-out and how it reduces your deduction

If your MAGI falls within the phase-out range, your deduction shrinks. The phase-out range is $15,000 wide for each filing status. For single filers in 2024, the range is $75,000 to $90,000. For married filing jointly, it is $155,000 to $170,000.

To calculate your reduced deduction, subtract the lower limit from your MAGI, divide by $15,000, and multiply by $2,500. Round up to the nearest $1 if you get a decimal. For example: if you are single, your MAGI is $80,000, and you paid $2,500 in interest, your calculation is ($80,000 − $75,000) ÷ $15,000 × $2,500 = $833. Your deduction is reduced by $833, leaving you with $1,667.

Once your MAGI reaches the top of the phase-out range, the deduction disappears completely. You cannot claim any deduction that year, even if you paid $2,500 or more in interest.

Where to claim the deduction on your tax return

You claim the student loan interest deduction on Form 1040 or Form 1040-SR, line 21, labeled "Student loan interest deduction." You do not need to file a separate form or attach any paperwork — just enter the amount on that line. The IRS will reduce your taxable income by that amount.

You can claim this deduction even if you take the standard deduction. Unlike itemized deductions, which replace the standard deduction, the student loan interest deduction is separate and available to everyone who qualifies. This is one of the few deductions that works this way.

If you use tax software, it will ask you about student loan interest and calculate the deduction for you. If you file by hand, write the amount on line 21 and keep your Form 1098-E with your records in case the IRS asks questions later.

Loans you cannot deduct

Loans used for expenses other than education do not may have access to. If you took out a student loan but used part of the money for a car, rent, or other non-education expenses, you can only deduct interest on the portion used for school. This is hard to prove, so most people either deduct the full amount (if the loan was genuinely used for school) or none of it (if it was mixed use).

Loans from family members do not may have access to, even if they were used for education. The IRS treats family loans as gifts, not true debt. Loans from your employer also do not may have access to. If your employer paid for your education directly or forgave a loan, that forgiveness may be taxable income to you instead.

Loans taken out in someone else's name do not may have access to for the person paying them. If your parent took out a Parent PLUS loan in their own name and you are paying it back, you cannot deduct the interest — only your parent can. This is a common source of confusion when adult children help their parents pay off education debt.

Frequently Asked Questions

Can I deduct student loan interest if I take the standard deduction?

Yes. The student loan interest deduction is separate from itemized deductions and works alongside the standard deduction. You can claim both in the same year. This makes it one of the few deductions available to people who do not itemize.

What if I paid more than $2,500 in student loan interest?

You can deduct a maximum of $2,500 per year, even if you paid more. The excess interest does not carry forward to future years. However, if your income is in the phase-out range, your deduction will be less than $2,500.

Do I need my Form 1098-E to claim the deduction?

You should have it, but if your servicer did not send one and you know you paid interest, you can still claim the deduction. Keep records of your payments. The IRS may ask for proof later, so having bank statements or loan statements is important.

Can I deduct interest on my parent's Parent PLUS loan?

No, only the parent who took out the loan can deduct the interest. If you are paying back your parent's loan, you cannot claim the deduction. Your parent can claim it if their income is below the phase-out limit, even if you are the one making the payments.

What happens to my deduction if my income goes above the phase-out range?

Your deduction shrinks as your income rises within the phase-out range. Once your MAGI exceeds the top of the range, you lose the deduction entirely for that year. If your income drops back below the range in a future year, the deduction becomes available again.