Student loan interest deduction: Eligibility, limits, and how to claim

01

How the deduction works

For federal income tax, this is an adjustment to income. It can reduce the income subject to tax, but it does not reduce your tax bill dollar for dollar like a tax credit can. The maximum before the income phaseout is the smaller of $2,500 or the qualified student loan interest you actually paid during that tax year. Required and voluntary interest payments may count when they otherwise meet the rules. IRS Publication 970 explains the adjustment and the limit.

You generally may claim it whether you take the standard deduction or itemize deductions. The deduction is subject to income limits, and your MAGI for this purpose can differ from the AGI shown on your return if certain income exclusions apply. Use the applicable IRS worksheet instead of estimating from AGI alone. IRS Tax Topic 456 and Publication 970 describe the worksheet and MAGI calculation.

02

Who may qualify

Eligibility is a set of requirements, not just a question of whether the debt is called a student loan. For the tax year at issue, check that all of these conditions fit your situation:

• You paid interest during that tax year on a qualified student loan, and you are legally obligated to pay interest on the loan.
• The loan was taken out solely to pay qualified higher education expenses for you, your spouse, or someone who was your dependent when the loan was taken out.
• The expenses were for an eligible student enrolled at least half-time in a degree, certificate, or other recognized credential program at an eligible educational institution. Qualified expenses can include tuition and fees, room and board within IRS limits, books, supplies, equipment, and other necessary expenses.
• The loan did not come from a related person and was not made under a qualified employer plan.
• Your filing status is not married filing separately.
• Neither you nor, if you file jointly, your spouse can be claimed as a dependent on someone else’s return.

The IRS has detailed definitions for a qualified loan, eligible student, related person, and eligible institution. Review those definitions if a loan paid more than one kind of expense or if someone else helped make payments. Publication 970, Chapter 4, Tax Topic 456, and the 2025 Form 1040 instructions cover these tests.

03

Limits and year-specific income phaseouts

Before the phaseout, the annual deduction is limited to the lesser of $2,500 or qualified interest actually paid. If MAGI enters the phaseout range, that amount is reduced gradually; it is eliminated at the upper limit. The filing-status ranges differ by tax year:

At or below the lower threshold, the deduction is not reduced by this phaseout. In the range shown, the allowed amount decreases as MAGI rises. Married filing separately is not eligible at any income level. The IRS lists the 2025 ranges in Publication 970 (2025). The 2026 joint-return thresholds above are from section .29, “Interest on Education Loans,” of Internal Revenue Bulletin 2025-45; its 2026 non-joint thresholds remain $85,000 and $100,000.

04

Filing steps: records, Form 1098-E, and the worksheet

1. Choose the tax year. Gather records of interest paid during that calendar tax year, along with loan statements or account history for each lender or servicer.
2. Reconcile Form 1098-E with your records. For 2025, the IRS says a lender that received at least $600 of interest on qualified student loans generally must send Form 1098-E. If you paid less than $600, you may not receive the form, but $600 is a reporting threshold—not a minimum interest amount for deduction eligibility. Check your account records for qualifying interest you actually paid, and ask the lender if a form or amount is missing. Publication 970 and Tax Topic 456 explain Form 1098-E.
3. Confirm the interest and loan qualify. Use the loan documents and payment history to verify that the loan was used only for qualifying education expenses and that you were legally responsible for the debt. Don’t count amounts that the IRS says cannot be deducted as student loan interest, such as certain interest paid by an employer or covered with tax-free education-plan earnings. See the exceptions in Publication 970.
4. Complete the correct year’s worksheet. For a 2025 return, use the Student Loan Interest Deduction Worksheet in the 2025 Form 1040 instructions, or Worksheet 4-1 in Publication 970 when its stated exception applies. For 2026, use the IRS worksheet and Form 1040 instructions for tax year 2026 when preparing that return; do not carry the 2025 worksheet or thresholds forward without checking the applicable-year instructions.
5. Enter the allowed amount where that year’s instructions direct. For tax year 2025, the IRS identifies Schedule 1 (Form 1040), line 21. This location is a 2025 instruction and is not a verified 2026 form instruction.

The 2025 worksheet in the Form 1040 instructions computes MAGI and applies the phaseout; Publication 970 explains when to use its own worksheet. Keep the 1098-E and account records with your tax documents.

05

Keep tax years and filing years separate

Tax year 2025 covers interest paid during 2025 and is generally reported on a return filed in 2026. Tax year 2026 covers interest paid during 2026 and is generally reported in 2027. Although the single, head-of-household, and qualifying surviving spouse phaseout thresholds are the same in the two years, the married filing jointly range changes from $170,000–$200,000 in 2025 to $175,000–$205,000 in 2026.

The claim location described here is verified for 2025 only. Confirm the 2026 worksheet, form line, and any updated rules in the IRS instructions for the 2026 return when you prepare it. Eligibility always depends on your own loan, payment, income, filing-status, and dependent facts, as well as the rules in force for the applicable year.

06

Official IRS sources

The statements and year-specific figures in this guide were checked against these primary IRS materials on November 7, 2026:

• Publication 970 (2025), Tax Benefits for Education — qualified loans and students, eligible expenses, the 2025 maximum and MAGI phaseout, Form 1098-E, worksheet, and 2025 claim location.
• Tax Topic No. 456, Student loan interest deduction — adjustment-to-income treatment, common eligibility conditions, and the Form 1098-E reporting threshold.
• Instructions for Form 1040 (2025) — 2025 eligibility rules and the Student Loan Interest Deduction Worksheet for Schedule 1, line 21.
• Internal Revenue Bulletin 2025-45 — Rev. Proc. 2025-32, section .29, which states the 2026 phaseout thresholds for interest on education loans.

This guide is general education for U.S. borrowers, not individualized tax advice. Tax eligibility depends on individual facts and current rules. Check the IRS material for the year you are filing, or consult a qualified tax professional about your circumstances.