The $2,500 Tax Break for Paying Your Student Loan
Do you qualify for the student loan interest tax deduction this year?


If you paid student loan interest last year, you could qualify for a tax deduction worth up to $2,500. You won’t receive that money back as a refund since the student loan interest deduction isn't a tax credit, but taking advantage of the deduction can help you reduce your taxable income.
However, the IRS has strict rules for who can claim the deduction, and not everyone qualifies for the maximum amount.
So, how much student loan interest — if any — can you deduct this year? Here’s what you need to know.

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.
Student loan interest deduction
The student loan interest deduction is among the most overlooked tax deductions, but qualifying for this tax break might be easier than you think. For example, both private and federal student loans qualify, and both required and voluntary interest payments are deductible.
Also, current students and graduates can benefit from the deduction, and in some cases, you can deduct student loan interest even though a parent pays your loan. Parents who took out student loans for their dependents are also often eligible (more on that below).
And while only student loans taken out solely to pay higher education expenses qualify, most types of education expenses are eligible.
- Tuition and fees are qualified education expenses
- Room and board expenses qualify
- Loans used for books, supplies, and equipment qualify
- Even transportation expenses qualify
Is student loan interest an itemized deduction? There is no need to itemize deductions to claim student loan interest. You can claim the student loan interest deduction even if you take the standard deduction.
Qualified education expenses and institutions: The student loan interest deduction isn’t limited to four-year college students. For the deduction, any of the following postsecondary educational institutions qualify if they are eligible to participate in a student aid program administered by the U.S. Department of Education.
- Colleges (includes community college)
- Universities
- Vocational schools
- Institutions that conduct internships or residency programs that lead to a degree or certificate from one of the above institutions or a hospital or healthcare facility that offers postgraduate training
Additionally, the IRS says the student loan interest must have been “paid or incurred within a reasonable period before or after you took out the loan.” However, you can only deduct student loan interest for the year you paid it.
Who can deduct student loan interest?
To deduct student loan interest, you must have taken out the loan for yourself, your spouse, or someone who was your dependent when you took out the loan. (A dependent generally refers to a qualifying child or qualifying relative.) So, paying interest on a loan taken out for your child typically counts for purposes of the deduction.
Can you deduct student loan interest if you didn’t make any payments? In some cases, you can claim the student loan interest deduction even if you were not the one to make payments (for example, if a parent made loan payments on your behalf). To deduct loan interest paid by a parent or anyone else, all of the following must be true:
- You must be legally responsible for repaying the loan.
- You can no longer be claimed as a dependent.
- Your filing status is not married filing separately.
(Note: The above criteria apply even if you made payments on your own student loans.)
Income limit for the student loan interest deduction
There is one more test for qualifying for the student loan interest deduction, and it’s based on your modified adjusted gross income (MAGI). The income limit is set annually for each filing status. Here are the 2023 income and phase-out limits:
Filing Status | MAGI | Deduction Amount |
Single, head of household, or qualifying surviving spouse | Less than $75,000 | Full deduction |
Married filing jointly | Less than $155,000 | Full deduction |
Single, head of household, or qualifying surviving spouse | $75,000-$89,999 | Reduced deduction |
Married filing jointly | $155,000-$184,999 | Reduced deduction |
Single, head of household, or qualifying surviving spouse | $90,000 or more | No deduction |
Married filing jointly | $185,000 or more | No deduction |
How much student loan interest can you deduct? You might not qualify for the full $2,500 deduction even if your MAGI falls below the amount set for your filing status. That’s because $2,500 is the maximum amount you can deduct each year. Your deduction is limited to the actual amount of student loan interest you paid during 2023.
- So, if you paid $800 in student loan interest, your deduction is limited to $800.
- And if you paid $3,000 in interest, you won’t be able to deduct more than $2,500.
Student loan interest deduction form
You should receive Form 1098-E from your lender if you paid $600 or more in student loan interest last year. However, you can still deduct student loan interest if you do not meet the $600 threshold. So, if you made student loan payments but haven’t received a Form 1098-E for 2023, it’s a good idea to contact your loan servicer and request a statement of interest paid. Some borrowers may be able to find this information by visiting their online account.
If you still have doubts about whether or not you qualify for the student loan interest deduction this year, you can visit the IRS Interactive Tax Assistant (ITA) tool for answers. The process will take approximately 10 minutes, and you will need the following information before you begin.
- Filing status
- Basic income information
- Your adjusted gross income (AGI)
- Educational expenses paid with nontaxable funds
MAGI limits for taking the student loan interest deduction are inflation-adjusted each year. So, if you don’t qualify for 2023, you might be able to claim the deduction next year. Additionally, there are several other education tax breaks, including the Lifetime Learning Credit and American Opportunity Credit, available to students and graduates.
For more information about tax breaks for college students and their families, see Kiplinger's report Eleven Education Tax Credits and Deductions.
Related Content
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.
-
Ask the Editor — Tax Questions on the New Senior Deduction
Ask the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the new $6,000 deduction for taxpayers 65 and older.
-
These Summer 2025 Back-to-School Tax-Free Weekends Are Starting Now
Sales Tax Over a dozen states offer back-to-school shoppers a sales tax holiday this summer.
-
Why Your Summer Budget Feels Tighter: Tariffs Push Up Inflation
Tariffs Your summer holiday just got more expensive, and tariffs are partially to blame, economists say.
-
Don’t Miss Alabama Tax-Free Weekend 2025
Tax Holiday Ready to save? Here’s everything you need to know about the 2025 back-to-school Alabama sales tax holiday.
-
Parents Prepare: Trump's Megabill Brings Three Crucial Tax Changes
Tax 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.
-
‘I Play Pickleball in Retirement.’ Is It HSA-Eligible?
Retirement Tax Staying active after you retire may be easier with these HSA expenses. But there’s a big catch.
-
Mississippi Tax-Free Weekend 2025
Tax Holiday Just in time for Prime Day, Mississippi celebrated a tax holiday in July. Find out what back-to-school essentials were included.
-
Ten Cheapest Places to Live in Virginia
Property Taxes The Commonwealth of Virginia has some cheap places to live. Here are a few if you hate paying property taxes.
-
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.