Internal Revenue Service United States Department of the Treasury
Level Basic Intermediate Advanced Military International

Adjustments to Income

Student Loan Interest

What is the Deduction?

The student loan interest deduction is generally the smaller of $2,500 or the interest paid that year on a qualified student loan. This amount is gradually reduced (phased out) or eliminated, based on the taxpayer's filing status and MAGI.

Click here to view the Effect of MAGI on Student Loan Interest Deduction in the Adjustment section of the Volunteer Resource Guide (Tab E).

Example

Robert has taken his first job after completing law school. His filing status is Single. He paid $3,000 in interest on his student loans during the tax year. With all adjustments to income (except student loan interest adjustment), his MAGI is $49,000. He can deduct $2,500 of his student loan interest as an adjustment to income.

Example

Veronica and her husband are filing jointly. Their MAGI is $125,000. She completed her doctoral degree in 2010 and paid $2,400 in student loan interest in 2011. Due to their high MAGI, their deduction must be calculated; it will be less than the full amount of interest that she paid.
Effect of MAGI on Student Loan Interest Deduction.

Effect of MAGI on Student Loan Interest Deduction