How to claim the student loan interest deduction

After a pandemic-era pause, interest resumed on student loans in Sept 2023, including for the nearly 10 million loans in forbearance and deferment. While that's strained many borrowers' finances, the interest may be deductible.

Depending on your income and filing status, that could lower your taxable income by as much as $2,500.

If you paid at least $600 in student loan interest last year, your servicer should send you a Form 1098-E, which discloses the exact amount you paid. If you have loans with multiple servicers, you may receive multiple 1098-E forms.

You won't receive a 1098-E if you paid less than $600, but you can find the amount from your servicer or on its website. With that, you can deduct the correct amount on line 21 of Schedule 1 (form 1040).

Read more: How to calculate your student loan interest

Best of all, the IRS considers it an adjustment to your income, so you don't have to itemize your return to claim it.

TurboTax will let you deduct student loan interest and roughly 37% of filers qualify for the free tier, according to the company. H&R Block also lets you claim deductions from 1098-E on its no-cost tier, but its paid plans come with a lot more support, including AI Tax Assist, online chat with a tax professional and Worry-Free Audit Support.

Student loan interest is tax-deductible, whether you have federal or private loans, so long as the funds were used for higher education for yourself, a spouse or a dependent.

But the amount you can claim drops as your Modified Adjusted Gross Income (MAGI) rises. Your MAGI is your adjusted gross income, minus alimony payments, IRA and HSA contributions, self-employment taxes and other tax breaks.

For tax year 2025, the deduction starts phasing out for individuals and heads of household at $85,000 and is fully phased out at $100,000. For married couples filing jointly, the tax break begins to phase out at $170,000 and is eliminated at $200,000.

Check this IRS worksheet to see if your MAGI falls within those thresholds.

To claim the deduction, you need to meet these criteria:

• You paid interest on an eligible student loan last year
• You're legally obligated to pay interest on that loan
• The student was enrolled at least half-time in a program leading to a degree, certificate or other recognized credential.
• Your filing status isn't married filing separately.
• Your modified adjusted gross income for 2024 was under $95,000 (or $195,000, if filing a joint return).
• No one claims you — or your spouse, if you are filing jointly — as a dependent.

The deduction applies to interest on loans used for higher education that meet these criteria:

• Interest was paid during the tax year the deduction is being claimed.
• The loan was for you, your spouse or someone who was your dependent at the time
• It was used during a standard academic period for an eligible student
• The money was used for expenses incurred within a reasonable period before or after its disbursement.

Education expenses that qualify include:

• Tuition and fees
• Room and board
• Textbooks, supplies and lab equipment
• Other necessary expenses, including transportation

If you're working toward a degree, you may qualify for these educational credits:

• The American Opportunity Tax Credit lets you claim up to $2,500 per student every year for the first four years they're in school or pursuing accreditation.
• You can claim up to $2,000 per student per year for yourself, a spouse or a dependent with the Lifetime Learning Credit, which covers a portion of tuition, fees and other qualifying expenses related to pursuing undergraduate, graduate or professional coursework.

Your school will need to send you a Form 1098-T to claim either credit. Carefully read the IRS's eligibility requirements to ensure you qualify.

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