Student Loan Interest Tax Deduction

Student loan interest can be claimed as a tax deduction. See if you qualify.

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The student loan interest deduction

A student loan interest deduction can be claimed if you are paying interest on student loans. You can claim up to $2500 in student loan interest depending on your income.

A student loan interest deduction is claimed as an adjustment - which means you can take the standard deduction, and still deduct student loan interest.

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Who qualifies for the student loan interest deduction?

For the 2006 student loan deduction:

  • Your filing status cannot be married filing separately
  • You cannot be claimed an exemption by someone else
  • The loan must be for tuition and other qualified expenses
  • You paid interest on an education loans after December 31, 2004.

Also, there are income restrictions:

  • If you are single, your income cannot exceed $65,000
  • If you are married, your income cannot exceed $130,000

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Claiming a student loan interest deduction

Locate Form 1098-E, calculate the total interest you have paid during the year. If you meet the requirements listed above, claim the full amount of the student loan interest deduction.

If you do not meet the requirements, you may have to make some further calculations to determine how much interest you can claim as a deduction.

Related IRS publications

Get more information about the 2006 student loan interest deduction from IRS Publication 970.

Note: you will need an Adobe Acrobat Reader to view these publications, which you can get here.