Student Loan Interest Deduction | Internal Revenue Service (Tax Year 2025)

Status Update (February 2026)

This page is updated for tax year 2025 returns filed in 2026.

For taxable year 2025, IRS inflation guidance sets student-loan-interest deduction phaseout bands at:

• $85,000-$100,000 for single and most non-joint filers
• $170,000-$200,000 for married filing jointly

You cannot claim this deduction if filing married filing separately.

IRS Topic 456 was updated in February 2026, and Rev. Proc. 2024-40 continues to control the 2025 phaseout ranges used for returns filed in 2026.

What This Deduction Does

The deduction allows eligible taxpayers to deduct up to $2,500 of qualified student loan interest paid during the year. It is an above-the-line deduction, so you can claim it even if you do not itemize.

Because it is a deduction (not a credit), the dollar value depends on your tax bracket.

Core Eligibility Rules

You generally must meet all of the following:

1. You paid interest in 2025 on a qualified student loan.
2. You are legally obligated to repay that loan.
3. You are not filing married filing separately.
4. You are not claimed as a dependent by another taxpayer.
5. Your MAGI is within the allowed range.

Qualified Loan Scope

Qualified student loans can include federal or private education loans used solely for eligible higher-education expenses. Refinanced education debt can still qualify if the refinanced balance remains tied to qualified education expenses.

If non-education debt is mixed into refinancing, deduction eligibility can be reduced or denied.

No-Double-Benefit Rule

IRS education guidance also states you cannot deduct as student-loan interest any interest paid by your employer under an educational assistance program for qualifying payments made after March 27, 2020 and before January 1, 2026.

Phaseout Math Reminder

The deduction is reduced on a prorated basis inside the MAGI phaseout range and goes to zero at:

• $100,000 MAGI (single and most non-joint filers),
• $200,000 MAGI (married filing jointly).

If your MAGI is near the cutoff, run the worksheet before filing instead of assuming the full $2,500 deduction is available.

How to Claim

1. Gather Form 1098-E from each servicer (if issued).
2. Pull backup statements showing interest paid.
3. Compute deductible amount (up to $2,500), then apply MAGI phaseout.
4. Report deduction on Schedule 1 (Form 1040).
5. File by April 15, 2026 (or extension).

No 1098-E does not automatically disqualify you; use your records if interest paid is below servicer reporting thresholds.

Common Mistakes

• Using prior-year phaseout thresholds.
• Claiming interest when another taxpayer is entitled to claim you.
• Claiming interest you were not legally obligated to pay.
• Ignoring no-double-benefit employer-paid interest rules.
• Treating mixed-purpose refinancing as fully deductible.

Recordkeeping Checklist

• Form 1098-E (where issued)
• Servicer account statements
• Refinance documentation
• MAGI calculation support
• Filed Schedule 1 and return copy

Co-Borrower and Payment Clarity

Only the person legally obligated on the loan can generally claim the deduction for interest they paid, subject to IRS rules. If family members help make payments, document who is obligated and who actually paid to avoid claiming by the wrong taxpayer.

When multiple servicers are involved after refinancing or loan transfers, reconcile annual interest totals across all statements before filing.

Official Sources

• IRS Topic 456: https://www.irs.gov/taxtopics/tc456
• IRS Publication 970 (education tax rules): https://www.irs.gov/publications/p970
• Inflation adjustments (Rev. Proc. 2024-40): https://www.irs.gov/irb/2024-45_IRB
• Filing deadlines: https://www.irs.gov/filing/individuals/when-to-file