After a pandemic-era pause, borrowers can once again claim the student loan interest deduction. With interest rates set to zero during the pause, the deduction was unavailable. Now that interest is accruing again, borrowers can deduct up to $2,500 of interest paid on eligible private or federal student loans.
Most borrowers couldn't claim the deduction on federal student loans during the pandemic-era pause on student loan bills, which spanned from March 2020 to October 2023.The student loan interest deduction allows qualifying borrowers to deduct up to $2,500 a year in interest paid on eligible private or federal education debt. allows qualifying borrowers to deduct up to $2,500 a year in interest paid on eligible private or federal education debt.
"All borrowers should explore whether they qualify for the deduction as it can reduce their tax liability," said Betsy Mayotte, president of Your lender or student loan servicer reports your interest payments for the tax year to the IRS on a tax form called a Depending on your tax bracket and how much interest you paid, the student loan interest deduction could be worth up to $550 a year, Kantrowitz said.
There are income limits, however. For 2024, the deduction starts to phase out for individuals with a modified adjusted gross income of $80,000, and those with a MAGI of $95,000 or more are . For married couples filing jointly, the phaseout begins at $165,000, and those with a MAGI of $195,000 or more are ineligible.Dan Niles names cash as a top pick for the first time since market drop in 2022
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Student Loans Tax Deduction Interest Finance IRS
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