Are Student Loan Payments Tax Deductible In 2026?
Last updated 05/13/2026 by
Ante Mazalin
Edited by
Andrew Latham
Summary:
Student loan payments are not deductible as a whole, but the interest portion of qualifying student loan payments is deductible above the line on Schedule 1 (Form 1040), Line 21, up to $2,500 per year, and that deduction is available regardless of whether you itemize.
Principal payments are never deductible under current law.
- Maximum deduction: $2,500 of student loan interest per year, per return, not per loan. The deduction is an above-the-line adjustment to income, reported on Schedule 1 (Form 1040), Line 21, per IRS Publication 970.
- 2025 income phase-out: The deduction phases out for single filers with modified AGI between $85,000 and $100,000, and for married filing jointly between $170,000 and $200,000. No deduction is available above those thresholds.
- 2026 phase-out (OBBBA): For tax years beginning in 2026, the joint filer phase-out range expands to $175,000–$205,000 under changes made by the One Big Beautiful Bill Act, while the single filer range remains $85,000–$100,000.
- Not available to all filers: Married filing separately filers cannot claim the deduction. Taxpayers who are claimed as a dependent on another person’s return also cannot claim it, even if they made the loan payments themselves.
Student loan payments consist of two components, principal and interest, and only one of them has any tax significance. The monthly payment amount reported by a servicer is not the deductible number. The interest portion is, and that distinction matters significantly for what actually shows up on a tax return.
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Are student loan payments tax deductible? Only the interest portion, up to $2,500 per year
No, not the full payment. According to IRS Publication 970, the student loan interest deduction allows eligible filers to deduct up to $2,500 of interest paid on a qualified student loan, not the total amount of loan payments made during the year. Principal repayment is not deductible under any provision of current federal law.
The deduction is an above-the-line adjustment to income, which means it reduces adjusted gross income without requiring the filer to itemize. It is reported on Schedule 1 (Form 1040), Line 21, and is subject to phase-out based on modified adjusted gross income.
Per IRS Topic 456, the loan must have been taken out solely to pay qualified higher education expenses for you, your spouse, or a person who was your dependent at the time the loan was taken out. The student must have been enrolled at least half-time in a degree or certificate program at an eligible educational institution.
Who can deduct student loan interest?
Eligibility depends on the filer’s income, filing status, and the nature of the loan.
- Single filers and heads of household under the income threshold: Eligible for the full $2,500 deduction if modified AGI is below $85,000 for 2025. The deduction phases out between $85,000 and $100,000 and is fully phased out at $100,000 or above. Per IRS Publication 970, modified AGI for this purpose is calculated without the student loan interest deduction itself, without the foreign earned income exclusion, and without certain other adjustments.
- Married filing jointly filers: Eligible if modified AGI is below $170,000 for 2025 (the full $2,500 is available). The deduction phases out between $170,000 and $200,000 and is fully phased out at $200,000 or above. For tax years beginning in 2026, the One Big Beautiful Bill Act expands the joint phase-out range to $175,000–$205,000.
- Married filing separately filers: Not eligible. Per IRS Publication 970, married taxpayers who file separately cannot claim the student loan interest deduction under any circumstances, regardless of income or the amount of interest paid.
- Filers who are claimed as a dependent: Not eligible. Per IRS Publication 970, a taxpayer who can be claimed as a dependent on another person’s return cannot deduct student loan interest, even if they personally made all the loan payments during the year. The deduction requires the filer to be the legal obligor on the loan and to have made the payments themselves.
- Filers whose loan was used for non-qualifying expenses: Not eligible on the non-qualifying portion. The loan must have been used solely to pay qualified higher education expenses, tuition, fees, room and board (within limits), books, supplies, and equipment required for enrollment. Interest allocable to non-qualifying expenses cannot be deducted.
Both federal student loans and private student loans qualify for the deduction, provided they were used exclusively to pay qualifying education expenses for an eligible student at an eligible institution.
How much student loan interest can you deduct?
The deduction is capped at $2,500 per return per year, regardless of how many qualifying loans you have. The actual deductible amount may be lower if your modified AGI falls within the phase-out range.
| Filer type / situation | 2025 deductible amount | Where to report |
|---|---|---|
| Single / HOH, MAGI below $85,000 | Up to $2,500 of interest paid | Schedule 1 (Form 1040), Line 21 |
| Single / HOH, MAGI $85,000–$100,000 | Partial deduction (reduced proportionally through phase-out range) | Schedule 1 (Form 1040), Line 21 |
| Single / HOH, MAGI $100,000 or above | $0, fully phased out | N/A |
| Married filing jointly, MAGI below $170,000 | Up to $2,500 of interest paid | Schedule 1 (Form 1040), Line 21 |
| Married filing jointly, MAGI $170,000–$200,000 | Partial deduction (reduced proportionally through phase-out range) | Schedule 1 (Form 1040), Line 21 |
| Married filing separately | $0, not eligible regardless of income | N/A |
The phase-out reduces the maximum $2,500 deduction proportionally. A single filer with $92,500 of modified AGI, halfway through the $15,000 phase-out range, would see the deduction reduced by 50%, to a maximum of $1,250. The IRS provides a worksheet in IRS Publication 970 for calculating the exact deductible amount when income falls within the phase-out range.
How to deduct student loan interest
Claiming the deduction requires confirming your income, gathering interest documentation, and reporting the correct amount on Schedule 1. Here is the process for eligible filers.
- Obtain Form 1098-E from every loan servicer from whom you paid $600 or more in interest during the year. Per IRS Publication 970, loan servicers are required to provide Form 1098-E, Student Loan Interest Statement, if you paid $600 or more of interest on a qualifying student loan. If you paid less than $600 in interest on a particular loan, the servicer may not issue a Form 1098-E, but the interest is still deductible if the loan qualifies. Add up interest from all qualifying loans, federal and private, to calculate total deductible interest before the $2,500 cap.
- Calculate your modified adjusted gross income (MAGI) for the student loan interest deduction. Per IRS Publication 970, MAGI for this purpose starts with your AGI before the student loan interest deduction and then adds back certain exclusions, including the foreign earned income exclusion, the foreign housing exclusion, and income from Puerto Rico or American Samoa. For most domestic filers, MAGI equals adjusted gross income from Form 1040, Line 11, before the deduction is entered.
- If your MAGI falls within the phase-out range, use the IRS Publication 970 worksheet to calculate your reduced deductible amount. The worksheet divides the amount by which your MAGI exceeds the lower threshold by the total width of the phase-out range ($15,000 for single filers, $30,000 for joint filers), then multiplies that fraction by $2,500 to determine the phase-out reduction. Subtract the reduction from $2,500 to arrive at your deductible amount.
- Enter the deductible amount on Schedule 1 (Form 1040), Line 21. This above-the-line deduction reduces your adjusted gross income and is available regardless of whether you itemize. Because the deduction reduces AGI, it can also affect eligibility for other income-based benefits, including the AOTC, the LLC, and income-based repayment plan calculations, making it more valuable than a below-the-line deduction of the same amount.
- Keep Form 1098-E and loan account statements for at least three years. Per IRC Section 6501, the IRS can audit returns within three years of the filing date. For loans where no Form 1098-E was issued (interest below $600), keep your own records of interest paid, such as year-end account statements from the servicer showing a full payment history with the interest/principal breakdown for each payment.
Common mistakes when deducting student loan interest
The most common error is attempting to deduct the total monthly payment rather than only the interest portion. Per IRS Publication 970, only interest on a qualifying student loan is deductible, principal repayment is not. The Form 1098-E shows the deductible interest amount directly; the total payment shown on a loan statement is not the right figure.
A related mistake is claiming the deduction while filing married filing separately. Per IRS Publication 970, married individuals who file separate returns cannot claim the student loan interest deduction regardless of how much interest they paid or whose loan it is. Married borrowers who believe filing separately will reduce their overall tax burden should factor in the permanent loss of the student loan interest deduction before making that filing decision.
- Deducting interest on a loan taken out for someone who is no longer a dependent: The loan must have been taken out at a time when the student was your dependent, your spouse, or yourself. Per IRS Publication 970, a parent who later takes out a new loan for an adult child who is no longer their dependent cannot deduct the interest on that loan, even if the parent is making all the payments.
- Missing interest paid on loans below the $600 Form 1098-E threshold: Servicers are not required to issue a Form 1098-E if interest paid is under $600, but that interest is still deductible if the loan qualifies. Filers who have multiple small loans or who paid off a loan early may miss deductible interest simply because no statement arrived. Year-end account statements from the servicer show the exact interest paid for the year, regardless of whether a 1098-E was issued.
- Failing to account for the impact of the deduction on income-based programs: The student loan interest deduction reduces AGI, which can also affect eligibility for income-driven repayment plans, SNAP benefits, and Medicaid where eligibility is AGI-based. Filers should calculate their AGI after the deduction before assuming income-based program eligibility thresholds are not met.
Pro tip: Borrowers whose income falls just above the phase-out threshold, particularly single filers near $100,000, may be able to reduce their MAGI below the cutoff by making additional pre-tax contributions to a 401(k), HSA, or other above-the-line deduction before year-end. Because the student loan interest deduction itself reduces the MAGI that determines its own availability, reducing MAGI through other means first can restore partial or full eligibility for the deduction. A filer with $101,000 of gross income who contributes $3,000 to a traditional 401(k) drops MAGI to $98,000, back inside the phase-out range, and may qualify for a partial student loan interest deduction that otherwise would have been completely unavailable.
The student loan interest deduction’s above-the-line status means it reduces AGI, which in turn can affect the calculation of other income-based benefits. A $2,500 deduction is worth more than just its face value multiplied by the marginal rate when it simultaneously improves eligibility for other programs.
Key takeaways
- Student loan interest, not the full payment, is deductible above the line on Schedule 1 (Form 1040), Line 21, up to $2,500 per year per return. Principal payments are not deductible. Per IRS Publication 970, the deduction is available without itemizing.
- For 2025, the deduction phases out between $85,000 and $100,000 MAGI for single filers and between $170,000 and $200,000 MAGI for married filing jointly. It is fully phased out above those thresholds. Married filing separately filers are ineligible regardless of income.
- For 2026, the One Big Beautiful Bill Act expands the joint filer phase-out range to $175,000–$205,000. The single filer phase-out range remains unchanged at $85,000–$100,000.
- Both federal and private student loans qualify if the loan was taken out to pay qualified higher education expenses for the filer, their spouse, or their dependent. Form 1098-E from each servicer shows the deductible interest amount, but interest below $600 on a single loan may not generate a Form 1098-E even if it is still deductible.
Frequently asked questions about deducting student loan payments
Can you deduct student loan interest without itemizing?
Yes. The student loan interest deduction is an above-the-line adjustment to income reported on Schedule 1 (Form 1040), Line 21. It reduces adjusted gross income directly and is available to standard deduction takers and itemizers alike, per IRS Publication 970. No Schedule A is required to claim it.
Is student loan interest deductible for a parent paying their child’s loans?
Only if the parent is legally obligated to repay the loan. Per IRS Publication 970, the deduction belongs to the person who is legally liable for the debt and who actually makes the payments. A parent who co-signed a loan may deduct the interest they pay if the student is claimed as a dependent on the parent’s return when the loan was taken out. A parent who voluntarily pays a loan that is solely in the adult child’s name cannot deduct the interest, because the parent is not the legal obligor.
What records do you need to deduct student loan interest?
Retain Form 1098-E from each servicer who issued one, year-end account statements from servicers showing the full interest/principal breakdown for the year (particularly for loans where no Form 1098-E was issued), and documentation confirming the loan was used for qualified higher education expenses at an eligible institution. Per IRC Section 6501, keep all records for at least three years from the filing date.
Can you deduct student loan interest if you are on an income-driven repayment plan?
Yes, the type of repayment plan does not affect eligibility for the deduction. Per IRS Publication 970, any interest paid on a qualifying student loan during the year is potentially deductible, regardless of whether you are on a standard repayment plan, an income-driven plan, or making partial payments. The deductible amount is the actual interest paid, which may be less than the interest accruing on the loan if your payments are smaller than the monthly interest on an income-driven plan.
If you have multiple loans, some of which may not qualify, or if your income is near the phase-out thresholds and you want to model the impact of other deductions on your MAGI, a tax professional can calculate the exact deductible amount. SuperMoney’s tax preparation services comparison includes CPAs and enrolled agents with experience in education-related tax benefits. Borrowers also funding college through a tax-advantaged account should review how 529 plan distributions interact with the student loan interest deduction when both are used in the same tax year.
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Disclaimer:The information on this page is for general educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are subject to change and vary based on individual circumstances. The content reflects IRS rules as of the date this article was last updated and may not account for recent legislative or regulatory changes. SuperMoney is not a licensed tax advisor, and nothing on this page creates an advisor-client relationship. Consult a licensed CPA or tax professional for guidance specific to your situation.
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