Student Loan Interest Deduction: $2,500 Limit and Phaseout

Guides · Updated October 17, 2026 · 3 min read

General information, not tax, legal or financial advice. We are not the IRS or the Department of Education. Check IRS.gov or a qualified tax professional. Sources read on October 17, 2026. Dates and amounts after 2026 are expected. Examples use made-up numbers. This page contains no affiliate links.

Short answer: The IRS says you may deduct the lesser of $2,500 or the interest you actually paid during the year on a qualified student loan. It's an adjustment to income, so you don't have to itemize. For tax year 2025, the deduction is phased out if your modified adjusted gross income (MAGI) is between $85,000 and $100,000 ($170,000 and $200,000 for joint returns) and eliminated at $100,000 or more ($200,000 joint).

Who can claim (IRS)

• You paid interest on a qualified student loan and are legally obligated to pay it;
• your filing status isn't married filing separately;
• you (and your spouse, if joint) aren't claimed as a dependent on someone else's return;
• your MAGI is under the limit. A qualified student loan was taken out solely to pay qualified higher education expenses for you, your spouse or a dependent when you took it out, for an eligible student, paid within a reasonable time before or after the loan. Loans from a related person or a qualified employer plan don't qualify.

The phaseout (Pub. 970)

Multiply the deduction (before phaseout, not over $2,500) by: (MAGI - $85,000) / $15,000 (single) or (MAGI - $170,000) / $30,000 (joint); subtract the result. Pub. 970's example: joint filers, MAGI $185,000, interest paid $2,750 -> maximum $2,500; reduction $2,500 x ($185,000 - $170,000) / $30,000 = $1,250; deduction $1,250. Made-up single example: interest $1,800, MAGI $90,000: reduction $1,800 x $5,000 / $15,000 = $600; deduction $1,200.

Where to claim

On Schedule 1 (Form 1040), line 21; use the worksheet in the Schedule 1 instructions (or Worksheet 4-1 if you exclude foreign or Puerto Rico income).

For 2026

The limits above are for 2025. The limits for tax year 2026 (the return filed in 2027) were not found; they are expected to be published by the IRS in Pub. 970 for 2026, usually after the year ends.

Related

Interest paid by someone else · Form 1098-E and capitalized interest

FAQ

Does it matter which repayment plan I'm on?

The IRS pages we read don't tie the deduction to a plan; it depends on interest actually paid.

Do voluntary payments count?

Yes: required and voluntarily prepaid interest.

What we could not verify