Student Loan Interest

How do student loan interest payments lower my taxes owed? 

Paying back your student loan won’t generate any tax breaks, but paying the interest on that student loan can, by reducing your income tax. You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year. 

Note: Since federal student loan interest was waived in 2021, the interest deduction will apply only to non-federal loans that continued to charge interest. 

You must meet all these requirements: 

• You paid interest during the tax year on a qualified student loan. 

• Your filing status is not Married Filing Separately. 

• You're legally obligated to pay interest on a qualified student loan 

• Your modified adjusted gross income (MAGI) is less than the specified amount (set annually. For 2024, the amount of your student loan interest deduction is gradually reduced (phased out) if your MAGI is between $80,000 and $95,000 ($165,000 and $195,000 if you file a joint return). You can’t claim the deduction if your MAGI is $95,000 or more ($195,000 or more if you file a joint return). 

• You are not claimed as a dependent on someone else’s return. 

Feel good about filing your taxes. 

At 1040.com, we’re all about making your taxes as simple as possible, even when you must report such information as student loan interest. With our flat $25 rate for everyone, you can wave goodbye to worrying about the price going up as you file. 

You ready? Just sign up or log in today to get started—we’ll see you there! 

Also see: Tax Breaks for Students and New Grads