Can I still deduct student loan interest in 2025? What's the income limit?

Yes, the student loan interest deduction is still available for 2025 — and it's an above-the-line deduction, which means you don't need to itemize to claim it.

The basics:

• Maximum deduction: $2,500 per year (or the actual interest paid, whichever is less)
• You can deduct interest paid on qualified student loans for yourself, your spouse, or a dependent
• The loan must have been taken out solely to pay qualified higher education expenses
• Claimed on Schedule 1, Line 21 (subtracts directly from your gross income)

2025 income phase-out thresholds:

If your MAGI is within the phase-out range, your deduction is partially reduced. If you're above the upper limit, you can't claim any deduction.

How the partial deduction works:

Suppose you're single with $90,000 MAGI and paid $2,000 in student loan interest. Your income is $5,000 into a $15,000 phase-out range, so 33.3% is phased out. Your deduction = $2,000 × (1 − 0.333) = approximately $1,333.

What counts as qualified interest:

• Interest on federal Direct Loans, PLUS loans, Perkins loans
• Private student loans from banks and lenders
• Does NOT include interest on loans from family members or certain employer plans

Who often misses this deduction:

• Recent graduates in their first few years of repayment
• Borrowers on income-driven repayment plans who assume small payments aren't worth tracking
• Parents who took out PLUS loans to fund their child's education (you can deduct interest if you're legally required to make the payments)