Is Student Loan Interest Tax Deductible?

Student Loans

If you paid interest on student loans last year, you’ll probably wonder, is student loan interest tax deductible? You’ll be happy to hear the answer is yes! However, there are certain rules and limits you need to be aware of before proceeding. Here, Xpress Cash covers all of the information you need to know to take advantage of the federal student loan interest tax deduction.

Are You Qualified?

First thing’s first: Are you eligible for the federal student loan interest tax deduction? 

  • If you pay your own student loans and use the single, head of household, or qualifying widow(er) filing status, you are eligible. 
  • If you are married and file a joint tax return, either you or your spouse can claim the deductible.
  • You must be legally obligated to repay your loan. 
  • Your student loan must have been initially borrowed to fund qualifying education expenses, i.e. tuition, fees, and books.
  • You cannot claim the deductible if you are married and file a separate married tax return. 
  • You cannot claim the deductible if you are listed as a dependent on another individual’s tax return.

If you’re unsure whether you qualify, check out this convenient online tool provided by the IRS. After you click “Begin” it will have you answer a series of questions to determine whether you are eligible for the deduction.

What Student Loan Interest is Tax Deductible?

As the name of the federal student loan interest tax deduction suggests, only the interest paid on your student loans is tax deductible. So, if you’re wondering if your entire monthly payment amount is deductible as well, the answer is no. 

How Much Interest on Student Loans Is Tax Deductible?

As of the 2019 tax year, the highest amount any qualified individual can claim on the student loan tax deduction is $2,500. Depending on your income, your deduction might be less. If your modified adjusted gross income falls within a certain phase-out range (the steady reduction of a tax credit an individual qualifies for as their income approaches the limit to qualify for the credit), your deduction might be lower. Eventually, if your income becomes too high, you will no longer qualify at all. 

Here’s an overview of the latest phase-out ranges for specific tax filing statuses, as of 2019:

Single

  • Phase-Out Begins: $70,000
  • Phase-Out Ends: $85,000

Head of Household

  • Phase-Out Begins: $70,000
  • Phase-Out Ends: $85,000

Qualifying Widow(er)

  • Phase-Out Begins: $70,000
  • Phase-Out Ends: $85,000

Married Filing Jointly

  • Phase-Out Begins: $140,000
  • Phase-Out Ends: $170,000

Turn to Xpress Cash for Additional Help

If you have any further questions about the student loan interest tax deduction, don’t hesitate to reach out to the friendly professionals at Xpress Cash for help! We have multiple locations across Michigan to serve you. Contact us or simply stop by for a visit today! Is personal loan interest tax deductible as well? Consult our guide to learn more.