Understanding the Student Loan Interest Deduction
The student loan interest deduction allows taxpayers to reduce their taxable income by the amount of interest paid on qualified student loans during the tax year. This deduction is available to both undergraduate and graduate students, and it can provide significant tax savings for those who qualify.
Income Limit for the Student Loan Interest Deduction
The student loan interest deduction is subject to a modified adjusted gross income (MAGI) limit. For tax year 2019, the MAGI limit for single filers is $70,000. For married couples filing jointly, the MAGI limit is $140,000.
Eligibility Criteria for the Student Loan Interest Deduction
To claim the student loan interest deduction, you must meet the following criteria:
- You must have paid interest on a qualified student loan during the tax year.
- You must be legally obligated to repay the student loan.
- Your filing status cannot be married filing separately.
- Your MAGI must be below the annual limit for your filing status.
- You cannot be claimed as a dependent on someone else’s tax return.
Qualified Student Loans
A qualified student loan is a loan that was used to pay for qualified higher education expenses. These expenses include tuition, fees, room and board, and other related costs. The loan must have been taken out by you, your spouse, or a person who was your dependent when you took out the loan.
Claiming the Student Loan Interest Deduction
The student loan interest deduction is claimed as an adjustment to income on your tax return. You do not need to itemize your deductions to claim this deduction.
Impact of MAGI on the Student Loan Interest Deduction
The amount of the student loan interest deduction is phased out for taxpayers with MAGIs above the annual limit. The deduction is reduced by $1 for every $5 of MAGI above the limit. For example, if your MAGI is $75,000 and you are single, your student loan interest deduction would be reduced by $1,000.
Additional Resources
For more information on the student loan interest deduction, please refer to the following resources:
How to Deduct Student Loan Interest to Save On Taxes
FAQ
Can I deduct student loan interest in 2019?
Is there an income limit for student loan interest deduction?
What is the phaseout for student loan interest deduction?
How to calculate student loan interest deduction?
How much is a student loan interest deduction for 2019?
For 2019, the amount of your student loan interest deduction is gradually reduced (phased out) if your MAGI is between $70,000 and $85,000 ($140,000 and $170,000 if you file a joint return). You can’t claim the deduction if your MAGI is $85,000 or more ($170,000 or more if you file a joint re-turn). For more information, see Figuring the Deduction.
How much student loan interest is tax deductible?
Note that the maximum student loan interest deduction is $2,500 per tax return. If you’re married filing jointly and you and your spouse each paid more than $2,500 in student loan interest, your maximum deduction is still $2,500, not $5,000. Read more: Here are the 2023-24 tax brackets and rates What loans qualify?
Can I deduct student loan interest if I’m married?
(Note: If you file as “married filing separately,” you can’t use the student loan interest deduction at all.) For the 2019 tax year — the return you’ll file in 2020 — the income thresholds are increasing: Deduction Starts to Phase Out With MAGI Above
Can you deduct student loan interest on Form 1040?
Unlike most other deductions, the student loan interest deduction is claimed as an adjustment to income on Form 1040. This means that you don’t have to fill out a Schedule A, which is used to itemize deductions, to claim it. As noted, you can deduct up to $2,500 of the interest you paid on an eligible student loan.