Student Loan Interest Deduction
The student loan interest deduction lets qualifying taxpayers deduct up to $2,500 of interest paid on eligible student loans during 2025, reducing taxable income even if they do not itemize deductions. The deduction applies to loans taken out solely to pay qualified higher education expenses for yourself, a spouse, or a dependent.
For 2025, the deduction begins to phase out when modified adjusted gross income exceeds $75,000 for single filers and $155,000 for married filing jointly, and it is eliminated entirely at $90,000 and $185,000 respectively. Borrowers who are claimed as dependents on another person's return are not eligible to take this deduction themselves.
Loan servicers report interest paid of $600 or more on Form 1098-E, which borrowers should retain as documentation. Interest paid on private student loans qualifies as long as the loan was used exclusively for education expenses, not just federal loans.