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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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
-
Turning 65 in 2026? Here Is Exactly How to Sign Up for MedicareWhether you’re months away from your 65th birthday or plan to work past retirement age, here are the steps to secure your Medicare coverage and avoid costly mistakes.
-
A Free Tax Filing Option Has Disappeared for 2026: Here's What That Means for YouTax Filing Tax season officially opens on January 26. But you'll have one less way to submit your tax return for free. Here's what you need to know.
-
Georgia Income Tax Elimination: What the 2026 Tax Cuts Mean for YouState Tax Georgia lawmakers aim to axe the state income tax by 2032. We break down the $16 billion fiscal shift, the fate of the state surplus, and which tax breaks are on the chopping block.
-
A Free Tax Filing Option Has Disappeared for 2026: Here's What That Means for You
Tax Filing Tax season officially opens on January 26. But you'll have one less way to submit your tax return for free. Here's what you need to know.
-
2026 State Tax Changes to Know Now: Is Your Tax Rate Lower?Tax Changes As a new year begins, taxpayers across the country are navigating a new round of state tax changes.
-
When Do W-2s Arrive? 2026 Deadline and 'Big Beautiful Bill' ChangesTax Deadlines Mark your calendar: Feb 2 is the big W-2 release date. Here’s the delivery scoop and what the Trump tax changes might mean for your taxes.
-
Are You Afraid of an IRS Audit? 8 Ways to Beat Tax Audit AnxietyTax Season Tax audit anxiety is like a wild beast. Here’s how you can help tame it.
-
States That Tax Social Security Benefits in 2026Retirement Tax Not all retirees who live in states that tax Social Security benefits have to pay state income taxes. Will your benefits be taxed?
-
10 Cheapest Places to Live in WashingtonProperty Tax Is Washington your go-to ski destination? These counties combine no income tax with the lowest property tax bills in the state.
-
3 Major Changes to the Charitable Deduction for 2026Tax Breaks About 144 million Americans might qualify for the 2026 universal charity deduction, while high earners face new IRS limits. Here's what to know.
-
Retirees in These 7 States Could Pay Less Property Taxes Next YearState Taxes Retirement property tax bills could be up to 65% cheaper for some older adults in 2026. Do you qualify?
