Can I deduct student loan interest on my taxes in 2025?

Yes, you can deduct up to $2,500 per year in student loan interest paid, even if you do not itemize. This is an above-the-line deduction claimed on Schedule 1, line 21, which directly reduces your AGI.

Income limits (2024):

• Full deduction: MAGI up to $80,000 (single) / $165,000 (MFJ)
• Reduced deduction: MAGI $80,000-$95,000 (single) / $165,000-$195,000 (MFJ)
• No deduction above these thresholds
• Cannot claim if filing Married Filing Separately

What qualifies:

• Interest on qualified education loans (federal and private student loans)
• The loan must have been taken out solely to pay qualified education expenses
• The student must have been enrolled at least half-time
• Loan origination fees are treated as interest spread over the life of the loan

Who can claim it:

• You are legally obligated to pay interest on the loan
• You actually made payments during the tax year
• You are not claimed as a dependent on someone else's return
• If your parents took out a Parent PLUS loan, they deduct the interest (not the student). If a parent pays the student's loan, the student can deduct it if they are the legal obligor (treated as a gift to the student then payment by the student).

Form 1098-E: Your loan servicer sends this form if you paid $600 or more in interest. If you paid less than $600, you can still claim the deduction but will need to look up the amount in your loan servicer's records or annual statement.

Interaction with forgiveness: Interest that accrues on loans during income-driven repayment is deductible when paid. If your loans are forgiven under PSLF, the forgiven amount is not taxable. Other forgiveness programs may result in taxable cancellation of debt income.