What it is
If you paid interest on a qualified student loan, you can subtract up to $2,500 of it from your income. It is an “adjustment to income”, so you get it even if you take the standard deduction instead of itemizing.
The income limits
| 2025 returns | 2026 returns | |
|---|---|---|
| Single, head of household, qualifying surviving spouse | phases out from $85,000 to $100,000 of MAGI | phases out from $85,000 to $100,000 |
| Married filing jointly | $170,000 to $200,000 | $175,000 to $205,000 |
| Married filing separately | not allowed | not allowed |
The 2026 numbers are from IRS Rev. Proc. 2025-32. The joint-return range moved up $5,000; the single range didn’t change.
How the phase-out works
IRS Publication 970’s worksheet does it in four steps:
- Take the interest you paid, up to $2,500.
- Subtract the start of the phase-out from your MAGI.
- Divide by $15,000 ($30,000 on a joint return), rounded to three decimal places, with 1.000 as the maximum.
- Multiply step 1 by step 3 and subtract that from step 1.
Example for 2026: single, MAGI $92,500, $2,000 of interest. ($92,500 − $85,000) ÷ $15,000 = 0.500. $2,000 × 0.500 = $1,000 off, so the deduction is $1,000.
Who can take it
All of these must be true:
- Your filing status isn’t married filing separately.
- No one can claim you (or your spouse, on a joint return) as a dependent.
- You are legally obligated to pay the loan.
- You paid interest on a qualified student loan during the year.
A qualified student loan is one taken out only to pay qualified higher education costs for you, your spouse, or someone who was your dependent when you borrowed, for a student enrolled at least half time. Loans from a relative or from an employer plan don’t qualify.
What counts as interest
- Required payments and extra payments you choose to make.
- Capitalized interest, in years when you make payments.
- The part of a loan origination fee that is a charge for using the money.
- Interest someone else pays for you counts as paid by you, unless it is your employer paying under an educational assistance program.
What MAGI means here
For most people it is your adjusted gross income before this deduction. If you exclude foreign earned income or housing, or income from Puerto Rico or American Samoa, you add that back.
How much tax it saves
The deduction lowers taxable income, so the saving is roughly the deduction times your top tax rate. At the 12% rate, $2,500 saves about $300; at 22%, about $550. The calculator works it out with the 2026 tax tables.
Not financial or legal advice. This page explains the published rules. It does not tell you which plan to choose. Your loan servicer and StudentAid.gov have the final word on your account.
Official sources
- 26 U.S.C. 221, interest on education loans (Cornell LII copy of the U.S. Code)
- IRS Rev. Proc. 2025-32: 2026 inflation adjustments (§4.29 student loan interest, §4.01 tax rates, §4.14 standard deduction)
- IRS Publication 970 (2025), Tax Benefits for Education, chapter 4
- IRS Topic No. 456, Student loan interest deduction (updated Sept. 24, 2026)
Last verified Oct 17, 2026. Corrections are logged on What changed.
Next guide: Form 1098-E: the student loan interest statement