Interest on student loans may be deductible. If the interest is qualified, it is deductible as an adjustment to income. Therefore, it is deductible whether or not you itemize other deductions on your tax return.
An eligible loan is a loan taken out for you, your spouse or dependent, and used for qualified education expenses within a reasonable time before or after you took out the loan. The interest is deductible in the year the interest was paid, not the year in which the education expenses were incurred and paid for. A loan from a related person such as a spouse, sibling, ancestor or lineal descendent does not qualify as an eligible loan.
For the list of qualified education expenses applicable to the student loan interest deduction, please see the link to IRS Publication 970 below.
The expenses must be incurred for attendance at a qualified educational institution. That term generally has the same meaning as it does for the credits.
The eligible student must be enrolled in a program leading to a degree, certificate or other recognized educational credential, and the student must be enrolled for at least one-half of the normal full-time workload.
The deduction (adjustment) for tax year 2016 is limited to 2,500. If your modified adjusted income is in excess of $80,000 (single) or $160,000 (joint return), the deduction is not available.
For complete information regarding this deduction, please see IRS Publication 970 (PDF).
- International Students
- U.S Citizens & Residents
- Taxation of Wages for U.S. Citizens and Residents
- Taxation of Scholarships, Fellowships & Stipends
- Student Loans
- Social Security and Medicare Taxes (FICA)
- State Income Taxes
- Forms and Publications
- Tax Implications and Reporting Requirements of Payments to U.S. Citizens, Permanent Residents or Resident Aliens
- Frequently Asked Questions for U.S. Citizens and Residents