Are Student Loans Tax-Deductible?

Your payments aren't deductible. The interest is. You can deduct up to $2,500 of the interest you paid on student loans last year, and you don't have to itemize to claim it.

The deduction comes off your taxable income, not your tax bill, and for 2026 it starts shrinking once your income passes $85,000 as a single filer ($175,000 if filing jointly).

When are student loans tax-deductible?

While you can’t deduct your entire student loan payment on your taxes, you can deduct up to $2,500 of the interest you paid over the course of the tax year.

This deduction applies to both federal and private student loans. However, once your modified adjusted gross income (MAGI) reaches the annual limit for your filing status, the deduction gradually phases out.

Read more >> Student Loans Explained: What You Need to Know

Who qualifies for the student loan interest deduction

You must have paid interest toward a student loan you took out for yourself, your spouse, or your dependent.

Two conditions apply to any federal, private, or personal loan you're claiming, including refinances:

• It was taken out solely to pay qualified education expenses. Borrow $10,000, put $8,000 toward tuition and $2,000 toward something else, and the whole loan is disqualified. Same goes for a refinance that rolls in other debt.
• It didn’t come from a relative or a qualified employer plan. A loan from a parent, grandparent, sibling, or spouse never qualifies, no matter what it paid for.

If you’re married and file separately, you can’t claim the deduction. You also can’t claim it if you’re listed as a dependent on someone else’s return.

The student loan interest deduction is what’s called “above the line,” meaning you can claim it even if you don’t itemize.

How much you can deduct

You can only deduct interest payments, not payments toward principal. The IRS says you can deduct the lesser of $2,500 or the actual interest you paid. A married couple with two sets of loans still gets $2,500 total.

Each student loan servicer should send you Form 1098-E if you paid at least $600 in interest. If you paid less than that, you should be able to see how much you paid toward interest in your online account.

Income limits for the deduction

The IRS updates income limits for this deduction and others each year. For 2026, the student loan interest deduction begins phasing out after your MAGI reaches $85,000 for single filers, heads of household, or qualifying surviving spouses ($175,000 for married filing jointly). The deduction disappears at $100,000 MAGI ($205,000 for married filing jointly).

Between those two figures you get a partial deduction, not the full $2,500 and not $0. The closer your MAGI is to the top of the range, the smaller it gets.

Read more >> How to Get Help With Student Loans

How to claim the student loan interest deduction

To claim this deduction, enter it on Schedule 1 (Form 1040). Enter the amount you're allowed to deduct, not the total interest you paid. For example, if you paid more than $2,500, you enter the cap of $2,500. If your income falls inside the phaseout range, use Worksheet 4-1 in Publication 970 to figure out the reduced amount.

(Worksheet references are from the 2025 forms. The IRS typically publishes the following year’s versions in late fall.)

If you don’t receive a 1098-E from your servicer, it doesn’t mean you can’t claim the deduction. Go to your servicer’s online portal to see how much of your payment went toward interest rather than principal, and enter the allowable deduction of up to $2,500 on your return.

Read more >> How to Lower Your Student Loan Interest Rate

‍You don't have to pay for tax help. The IRS runs Free File for most filers and VITA, which offers free in-person help for people under certain income thresholds, people with disabilities, and limited-English speakers. TCE focuses on filers 60 or older. Reach out to 800-906-9887 to find a site, or call AARP Tax-Aide, which runs most TCE sites, at 888-227-7669.

If your situation is more complicated, talk with a CPA or enrolled agent for guidance specific to your situation. Enrolled agents are licensed by the IRS and can cost less.

Can student loan payments help your credit?

Student loan payments do one useful thing besides retiring the debt: they report your payment history to the credit bureaus.

Establishing positive payment history

Your payment history is the most important factor in determining your credit score, and it accounts for 35% of your FICO score. As you make on-time payments, your servicer reports them to the credit bureaus, helping you build credit history.

A missed payment doesn't hit your credit report right away. Federal loan servicers generally don't report a delinquency until it’s 90 days past due, which gives you close to three months to get current or ask your servicer about a deferment, a forbearance, or an income-driven plan.

Private lenders can report at 30 days, so check your lender's policy. Once a late payment is reported, it stays on your report for seven years.

Credit mix

Your credit mix is the variety of different types of credit you have. Lenders want to see if you can successfully handle a few different types of credit, like credit cards and installment loans. Student loans are considered installment loans.

Credit mix only accounts for 10% of your FICO score, so it doesn’t matter quite as much as payment history.

Length of credit history

The length of your credit history accounts for 15% of your FICO score. When lenders see that you have successfully managed credit over time, you are considered less risky to lend to.

Paid-off student and other installment loans stay on your report for up to 10 years, and they keep counting toward your credit history the whole time.

Read more >> Do Student Loans Affect Your Credit Score?

Bottom line

Deduct the interest, not the payment, on up to $2,500. And check the phaseout and filing-status rules before you count on it.

The deduction shows up once a year, on one line of your return. Your credit file updates every month, and it's the one a lender actually reads. If student loans are the only account on your report, adding one more in your own name changes what that file says.

A Kikoff Credit Account reports to all three bureaus, with no credit check to open. Plans start at $5 a month.