Student Loan Debt? There’s A Tax Deduction For That

Whether for private or federal student loans, there’s one tax break based on the interest paid by the borrower in a year. But that deduction might be gone soon. 

According to the IRS, those who’ve paid more than $600 in student loan interest should have received Form 1098-E from their loan issuer. When borrowers file that form, they can receive a tax deduction of up to $2,500 if they fall within a certain income range and meet other criteria. 

Single filers who made less than $95,000 in modified adjusted gross income (MAGI) in 2024 can get a tax break of $2,500 or the amount they paid in interest on qualifying loans in a tax year, whichever is less. MAGI is adjusted gross income plus independent retirement account contributions, student loan interest, foreign earned income and other credits and deductions a filer may take.

For the 2025 year, single filers who make $100,000 or more in MAGI, will not be eligible for the tax break. There are also other criteria that the IRS lists so that a filer can see if they’re eligible.

CNBC suggests that this tax break might be eliminated by President Trump. But for now, eligible borrowers can take advantage of it.