Student Loan Interest Deduction

February 20, 2018 : Monica Welsh

You might be paying back loans you took to finance higher education. If so, you could qualify to deduct up to $2,500 of student loan interest per return per year. You can claim the student loan interest tax deduction as an adjustment to income. You don’t need to itemize deductions to claim it.

Student loan interest is interest you paid during the year on a qualified student loan. A qualified student loan is a loan you took out only to pay qualified education expenses that were:

  • For you, your spouse, or a person who was your dependent when you took out the loan
  • Paid or incurred within a reasonable period of time before or after you took out the loan
  • For education provided during an academic period for an eligible student

Loans from these sources aren’t considered qualified student loans:

  • Related person
  • Qualified employer plan

Qualified education expenses are the total costs to attend an eligible school. This includes graduate school. The costs include:

  • Tuition and fees
  • Room and board
  • Books, supplies, and equipment
  • Other necessary expenses, like transportation

You can usually claim the student loan tax deduction if you meet all these requirements:

  • Your filing status is any status except married filing separately.
  • No one else is claiming you as a dependent.
  • You’re legally obligated to pay interest on a qualified student loan.
  • You paid interest on a qualified student loan.

If you’re married filing jointly:

  • You can deduct the full $2,500 if your modified adjusted gross income (AGI) is $135,000 or less.
  • Your deduction is gradually reduced if your modified AGI is more than $135,000 but less than $165,000.
  • You can’t claim a deduction if your modified AGI is $165,000 or more.

If you’re filing as single, head of household, or qualifying widow(er):

  • You can claim the full $2,500 deduction if your modified AGI is $65,000 or less.
  • Your deduction is gradually reduced if your modified AGI is between $65,000 and $80,000.
  • You can’t claim a deduction if your modified AGI is $80,000 or more.

To learn more, see Chapter 4 of Publication 970: Tax Benefits for Higher Education at www.irs.gov.

Related Topics

Related Resources

Preparing Your Tax Document Checklist

If you are just getting your tax documents together and figuring out what to do next, here is a handy checklist to help you keep everything organized.

Taxes Get Personal: What’s Your Filing Status?

Do you know what your tax filing status is? Learn how to determine and check your tax filing status with H&R Block.

Charitable Giving Around the Holidays

Learn more about the potential tax benefits of charitable holiday giving. Your holiday donations may boost your refund, depending on the organization.

Common Tax Questions Roundup

Here are the top tax questions our professionals got this year – with answers for you! How can you use this? Read on to get answers from H&R Block.

Monica Welsh

Monica Welsh

The Tax Institute, H&R Block

Monica is a tax research analyst in the Tax Institute. She specializes in the areas of business and investment. Monica is a graduate of the University of Missouri-Kansas City School of Law with a JD and an LLM in tax.