What Is the Student Loan Interest Deduction?

The student loan interest deduction allows borrowers to deduct up to $2,500 of interest paid on qualifying student loans during the tax year, directly reducing your adjusted gross income — which is why it's called an above-the-line deduction. You don't need to itemize to claim it; the deduction is taken before calculating your AGI on the front of Form 1040. The deduction applies to interest on loans used to pay for qualified higher education expenses for yourself, your spouse, or a dependent. It phases out for single filers with MAGI between $75,000 and $90,000 and for married filers between $155,000 and $185,000 — and you cannot claim the deduction at all if you file as married filing separately. You also can't claim the deduction if someone else (like a parent) can claim you as a dependent, even if you're actually making the loan payments yourself.