My friend has told me that you can deduct student loans. I told him it was just the interest that you can deduct, but he says you can deduct both. Which one is it? Can you deduct student loans?
Tell your friend that you're correct -- you can deduct only the interest. But you may be able to take a decent-sized write-off.
You can deduct up to $2,500 in student-loan interest paid in 2007 if your income for the year was $55,000 or less if single, or $110,000 or less if married filing jointly. Single people can take a partial deduction if they earned up to $70,000 for the year, or $140,000 if married filing jointly.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You can take the deduction regardless of whether you itemize. You may even qualify to take the write-off yourself if your parents paid the interest on a loan for which you were legally liable (your parents, however, cannot claim the deduction if they weren't liable for the loan). You cannot deduct student-loan interest if you are being claimed as a dependent on your parents' tax return.
For more information about deducting student-loan interest and other education-related tax breaks, see Tax Breaks for Education. Also see IRS Publication 970, Tax Benefits for Education.
For other ways to lower your taxes, see The 13 Most Overlooked Tax Deductions and the Kiplinger Tax Center.
Families whose kids will be attending college soon -- or who are there right now -- can find help with the bills in Everything You Need to Know About College Aid.
-
No More Capital Gains Tax on Home Sales? What You Need to KnowTax Policy Capital gains taxes are back in the spotlight. This time, the chatter on Capitol Hill has to do with rising home prices.
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund next year, a smaller one, or something in between. Here are five ways the new law could impact your bottom line.
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)
Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund next year, a smaller one, or something in between. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ PocketsTax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Three Surprising Ways Trump’s New Tax Law Could Change Your Child’s Money StoryTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
New Cap on Gambling Loss Deductions Begins Soon: What to Know NowTax Changes A gambling losses tax deduction cap in Trump’s “big beautiful bill” is causing an uproar. Here’s what you need to know.
-
Key 2025 Tax Changes for Parents in Trump's MegabillTax Changes Are you a parent? The so-called ‘One Big Beautiful Bill’ (OBBB) impacts several key tax incentives that can affect your family this year and beyond.
-
Elon Musk and Most Taxpayers Don't Like What's in Trump's 'Big Beautiful Bill'Tax Policy President Trump is betting big on his newest tax cuts, signed into law on July 4. But not everyone is on board.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'Tax Deductions The GOP tax bill could make hidden homeowner costs worse for you. Here’s how.
-
No Social Security Tax Changes in Trump’s 'Big Bill'? What Retirees Need to KnowTax Policy Eliminating taxes on Social Security benefits is missing from President Trump’s tax overhaul. Here’s why and what an alternative offering could mean for retirement taxes.
