Can I deduct student loan interest?
Why This Deduction Is Especially Valuable
Most deductions require you to itemize on Schedule A — which means they’re only useful if your total itemized deductions exceed the standard deduction ($14,600 single / $29,200 married filing jointly for 2025). The student loan interest deduction is different: it’s an “above-the-line” deduction, meaning it reduces your adjusted gross income (AGI) directly. You get it whether you itemize or not.
Reducing your AGI has a cascading effect — it can also lower the threshold for other deductions and credits that are AGI-dependent (like medical expenses, education credits, and Roth IRA eligibility).
Income Limits for 2025
The deduction phases out at higher incomes. Here are the thresholds:
| Filing Status | Full Deduction | Phase-Out Range | No Deduction |
|---|---|---|---|
| Single / Head of Household | Under $80,000 | $80,000 – $95,000 | Over $95,000 |
| Married Filing Jointly | Under $165,000 | $165,000 – $195,000 | Over $195,000 |
| Married Filing Separately | Not eligible (any income) | ||
If your modified adjusted gross income (MAGI) falls in the phase-out range, you get a partial deduction. The calculation is straightforward — the IRS provides a worksheet in the Form 1040 instructions, and tax software does it automatically.
What Qualifies
Your loan qualifies if all of these are true:
This covers federal student loans (Direct, Stafford, PLUS), private student loans, and most refinanced student loans — as long as the original purpose was qualified education expenses. Loans from family members do not qualify.
What Counts as “Interest”
The deductible amount includes: regular interest payments, capitalized interest (interest that was added to your loan balance during deferment), and loan origination fees that are treated as interest by your lender. Your lender reports the total on Form 1098-E, which they’re required to send you if you paid $600 or more in interest. If you paid less than $600, you can still deduct it — you’ll just need to check your account statements.
Where It Goes on Your Return
Report the deduction on Schedule 1 (Form 1040), Line 21. The amount flows to Form 1040, Line 10, reducing your adjusted gross income. Tax software typically imports this automatically from your 1098-E if you enter the form. If you’re filing by hand, transfer the amount from Box 1 of your 1098-E (up to $2,500 max) to Schedule 1.
What About Loan Forgiveness?
If any portion of your student loans was forgiven, the forgiven amount may be treated as taxable income in some cases. However, under the American Rescue Plan, student loan forgiveness is excluded from federal taxable income through the end of 2025. State tax treatment varies — some states still tax forgiven loan amounts. This is a separate issue from the interest deduction — you can deduct interest you paid even if part of the loan is later forgiven.
The Bottom Line
Yes, deduct your student loan interest — up to $2,500/year, no itemizing required. Check your Form 1098-E from your lender, verify you’re under the income limits, and claim it on Schedule 1, Line 21. This is one of the easiest deductions to claim and one of the most commonly overlooked. If you paid any student loan interest this year and your MAGI is under $95,000 (single) or $195,000 (MFJ), you should be claiming this.