If you paid interest on student loans, you may be able to lower your taxable income with the student loan interest deduction. This deduction lets you deduct up to $2,500 of qualified student loan interest and can be claimed even if you don’t itemize deductions.
This deduction is taken as an adjustment to income, which means it reduces your income before taxes are calculated.
Who qualifies for the student loan interest deduction?
You may qualify if all of the following are true:
You paid interest on a qualified student loan during the tax year.
You were legally required to pay that interest.
You’re not filing married filing separately.
Your modified adjusted gross income (MAGI) is below:
$85,000 for single, head of household, or qualifying surviving spouse filers
$170,000 for married filing jointly
You (and your spouse, if filing jointly) can’t be claimed as a dependent on someone else’s return.
The deduction phases out as your MAGI approaches these limits.
What counts as a qualified student loan?
A qualified student loan is a loan taken out only to pay for qualified higher education expenses for:
You
Your spouse
A dependent you claimed at the time the loan was taken out
The education must be for an eligible student during an academic period, and the loan must be paid or incurred within a reasonable time around when the education expenses were paid.
Loans that don’t qualify
These loans don’t count:
Loans from a related person (such as a family member)
Loans from a qualified employer plan
How much student loan interest can I deduct?
You can deduct up to $2,500 of qualified student loan interest per return. This is a deduction, not a credit, which means it lowers your taxable income rather than directly reducing your tax bill.
Form 1098-E: student loan interest statement
If a lender received $600 or more in interest payments on your qualified student loans during 2025, they’ll send you Form 1098-E by January 31, 2026.
Form 1098-E shows how much interest you paid during the year. If your loans were taken out before 09/01/2004, the form may only show stated interest and may not include certain fees or capitalized interest.
Important: If some qualifying interest doesn’t appear on Form 1098-E, you can still deduct it. Keep your payment records to support the amount you claim.
Are forgiven student loans taxable?
At the federal level, student loan forgiveness granted between 01/01/2021 and 12/31/2025 is generally not taxable income.
State tax treatment can differ. Some states follow federal rules, while others may tax forgiven student loan amounts. Check with your state tax authority to understand how forgiveness is treated where you live.
This content is provided for informational purposes only and should not be construed as tax, legal, financial, accounting, or other advice. Rules and regulations vary by location and are subject to change, so please consult with an expert if you need advice specific to you.
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