Student Loan Interest Deduction in Texas
The student loan interest deduction lets qualifying borrowers deduct up to $2,500 of interest paid on eligible student loans from their federal adjusted gross income in 2025. The deduction is available without itemizing and applies to loans taken out for tuition, fees, and other qualified higher education expenses at accredited institutions.
Texas has no state income tax, so the student loan interest deduction is a federal-only benefit for Texas residents. Borrowers attending UT Austin, Texas A&M, Rice, or any accredited Texas college or university can reduce their federal taxable income using this deduction. The phase-out begins at $75,000 for single filers and $155,000 for joint filers in 2025.
Texas borrowers should look for Form 1098-E from their loan servicer each January, as this form reports the total interest paid during the year. Because there is no state tax return to file, maximizing the federal deduction is the primary strategy for Texas residents looking to offset the cost of student loan repayment.