Student Loan Interest Deduction

The Student Loan Interest Deduction allows you to reduce your taxable income by up to $2,500 per year for interest paid on qualified student loans. This deduction can be claimed even if you don't itemize your deductions, potentially lowering your tax bill. It applies if you're paying interest on loans taken for education expenses for yourself, your spouse, or dependents. Eligibility depends on your income—phases out at higher income levels—and you must be legally obligated to repay the loans. This benefit helps offset some of the costs associated with student loans, making higher education more affordable.