Tax Guide

Get answers to all your questions about taxes, personal finance, insurance and more.

How to Deduct Student Loan Interest

Paying back your student loan won’t generate any tax breaks, but paying the interest on that student loan can, by reducing your income tax. The max deduction is $2,500.

The student loan interest amount goes on line 33 of our Form 1040 – Adjustments Section screen. When you enter the interest amount, we’ll figure the deduction for you automatically.

You must meet all of these requirements:

  • You paid interest during the tax year on a qualified student loan.
  • Your filing status is not married filing separately.
  • Your modified adjusted gross income (MAGI) must be less than $80,000 if filing single, head of household or qualifying widow(er); $160,000 if filing status is married filing jointly.
  • You are not claimed as a dependent on someone else’s return.

Note: In times past you had to be responsible for the loan debt and pay it back yourself in order to qualify for the deduction. But nowadays, if your parents pay back the loan, the IRS lets you claim the deduction if your parents don't claim you as a dependent.

Also remember that the deduction is for the person who took out the student loan. So, if your parents actually got the loan, but you pay it back, the deduction is theirs.

Also see: Tax Breaks for Students and New Grads