Student loan interest deduction

You can subtract up to $2,500 of student loan interest from your income each year. It is an above-the-line deduction: it lowers your adjusted gross income, and you get it whether or not you itemize.

Only the interest counts, not the principal. The $2,500 cap is per return, not per loan, and covers the combined interest on all of your qualified loans.

Below the range you get the full deduction. Inside it, the deduction shrinks in proportion to how far in you are. At the top it is gone. For most people, MAGI is AGI figured before this deduction.

You can take the deduction if all of these are true:

• You paid interest in 2026 on a loan taken out solely to pay qualified education expenses (tuition, fees, room and board, books, supplies, and transportation) for you, your spouse, or someone who was your dependent when you borrowed.
• You are legally required to repay the loan. If your parents borrowed in their name, the deduction is theirs, even if you make the payments.
• The student was enrolled at least half-time in a program leading to a degree or other recognized credential.
• Your filing status is not married filing separately.
• No one else claims you as a dependent on their return.
• The lender is not a relative or a qualified employer plan.

Federal and private loans both count. A refinanced loan counts if it only replaced student loans and did not add cash for anything else.

Single filer, MAGI of $92,500, $2,500 of interest paid in 2026.

• MAGI over the $85,000 threshold: $92,500 minus $85,000 = $7,500.
• Share of the $15,000 range crossed: $7,500 divided by $15,000 = 50%.
• Reduction: $2,500 x 50% = $1,250.
• Deduction: $2,500 minus $1,250 = $1,250.

Taxable income after the $16,100 standard deduction lands in the 22% bracket, so the $1,250 deduction saves about $275 in federal tax. At $85,000 of MAGI or less the full $2,500 applies, worth about $550 in the 22% bracket. At $100,000 or more the deduction is zero.

Your servicer sends Form 1098-E by early February if you paid $600 or more of interest during the year. Box 1 shows the interest. If you paid less than $600 you may not get a form, but the interest still counts. Use your servicer's account statements instead.

Enter the deduction on Schedule 1 (Form 1040), line 21. Tax software asks for the 1098-E amount and does the phase-out math. If you file on paper, the Student Loan Interest Deduction Worksheet in the Form 1040 instructions walks through the same steps as the example above.

Keep the 1098-E with your records. You do not attach it to the return.