The student loan interest deduction allows you to deduct the interest you paid on a qualified student loan throughout the year. This includes both required and voluntary interest payments. You can deduct the lower of $2,500 or the total interest you actually paid during the year. However, the deduction is gradually reduced and eventually phased out as your Modified Adjusted Gross Income (MAGI) reaches the annual limit for your filing status.
Since this deduction is claimed as an adjustment to income, you don’t need to itemize your deductions to benefit from it.
Eligibility Criteria
You may qualify for the student loan interest deduction if all of the following conditions apply:
You paid interest on a qualified student loan in tax year 2024.
You are legally responsible for repaying the loan.
Your filing status is not married filing separately.
Your MAGI is below the annual limit set by the IRS.
Neither you nor your spouse (if filing jointly) were claimed as a dependent on someone else’s tax return. This means no other taxpayer listed your name on Form 1040, 1040-SR, or 1040-NR.
What Qualifies as a Student Loan?
A qualified student loan is one that was specifically taken out to cover qualified higher education expenses. These expenses must have been:
For yourself, your spouse, or a dependent at the time you obtained the loan.
Used for education during an eligible academic period.
Paid or incurred within a reasonable timeframe before or after you took out the loan.
For more details on qualifying expenses, refer to Publication 970, Tax Benefits for Education.
Special Situations
If you file Form 2555 (Foreign Earned Income), Form 4563 (Exclusion of Income for Bona Fide Residents of American Samoa), or exclude income from Puerto Rico, use Worksheet 4-1 in Publication 970 to calculate your deduction instead of the worksheet in the Form 1040 instructions.
Form 1098-E: Student Loan Interest Statement
If you paid $600 or more in student loan interest during the year, you should receive a Form 1098-E from your loan servicer. This form reports the total interest you paid, which you can use to claim the deduction.
For further details on the student loan interest deduction and how your MAGI impacts the deduction amount, see Publication 970 or visit the IRS website.