Student Loan Interest Deduction (IRC §221)
Enter the student loan interest you paid this year, your MAGI, and your filing status to estimate your federal tax savings under TY2026 phase-out rules.
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About the Student Loan Interest Deduction (IRC §221)
Internal Revenue Code §221 lets borrowers deduct up to $2,500 of student loan interest paid during the year as an above-the-line adjustment to income — meaning you claim it on Schedule 1 of Form 1040 whether or not you itemize. The deduction reduces your AGI directly, so it can also shrink other AGI-tied phase-outs (Saver's Credit, IRA deduction, premium tax credit eligibility).
TY2026 phase-outs at a glance (Rev. Proc. 2025-32 §3.21)
- Single / Head of Household: deduction begins phasing out at MAGI $85,000 and is fully phased out at MAGI $100,000.
- Married Filing Jointly: phase-out band $170,000–$200,000.
- Married Filing Separately: deduction is disallowed entirely per IRC §221(e)(2).
What qualifies as student loan interest
- Interest on loans taken solely to pay qualified higher-education expenses (tuition, fees, room and board, required books and supplies) for you, your spouse, or a dependent.
- The loan must be issued for attendance at an eligible institution and the student must be enrolled at least half-time.
- Federal Direct loans (Sub / Unsub / Grad PLUS / Parent PLUS), FFEL loans, refinanced loans (federal or private), and qualifying private student loans all count.
- Mixed-purpose loans (e.g., a personal loan partly used for tuition) and loans from related parties do not qualify.
Related calculators
- Student Loan Repayment Calculator
- Income-Driven Repayment Calculator
- Student Loan Refinance Calculator
- Federal Income Tax Calculator
- 1099 Tax Calculator
Related reading
Frequently asked questions
How does the student loan interest deduction work in 2026?
IRC §221 lets you deduct up to $2,500 of student loan interest paid during the year as an above-the-line adjustment to income (you don't have to itemize). The deduction phases out based on your modified adjusted gross income (MAGI) and filing status. For tax year 2026 per Rev. Proc. 2025-32 §3.21, the phase-out ranges are $85,000–$100,000 for single and head-of-household filers and $170,000–$200,000 for married filing jointly. Married filing separately filers cannot claim the deduction at all.
What is the $2,500 cap on the student loan interest deduction?
IRC §221(b)(1) caps the deduction at $2,500 per return per year, regardless of how much interest you actually paid. A high-balance graduate borrower paying $6,000 in annual interest can only deduct $2,500. The cap is per return (not per borrower), so a married couple filing jointly with two separate student loans still shares the single $2,500 limit.
Why can't married filing separately filers claim the §221 deduction?
IRC §221(e)(2) explicitly disallows the deduction for any taxpayer using the married filing separately (MFS) status. This is the same anti-abuse rule that disqualifies MFS from several other education and family tax benefits (American Opportunity Credit, Lifetime Learning Credit, EITC). If one spouse on income-driven repayment uses MFS to shrink their reported income for IDR purposes, the trade-off is losing the §221 deduction entirely on the joint household.
What counts as "qualified" student loan interest?
Per IRC §221(d), qualified interest is interest on a loan taken solely to pay qualified higher education expenses (tuition, fees, room and board, required books and supplies) for you, your spouse, or a dependent at an eligible institution, while enrolled at least half-time. Federal Direct loans, Grad PLUS, Parent PLUS, FFEL loans, and private student loans all qualify. Mixed-purpose loans (e.g., a personal loan partly used for tuition) do not. Voluntary interest payments during in-school periods or grace also qualify.
Do I get a 1098-E from my loan servicer?
Yes, if you paid $600 or more in interest during the year. Loan servicers issue Form 1098-E by January 31 of the following year showing total interest paid. If you paid less than $600 across all servicers, you may not receive a 1098-E automatically — but you can still log into your servicer account, pull the year-end interest summary, and claim it. Many borrowers miss the deduction in their first year of repayment because they fall below the $600 mailing threshold.