Student loan borrowers can get a tax break worth up to $2,500—see who qualifies​on February 5, 2025 at 2:00 pm

If you made student loan payments last year, there’s a good chance you can get a break on your taxes.

Don’t forget about the student loan interest deduction, which allows taxpayers to deduct the amount they paid in student loan interest from their taxable income. Taxpayers can deduct up to $2,500 or the amount they paid in interest on qualifying loans in the given tax year, whichever is lower. 

Qualifying loans include both federal and private student loans used to pay for higher educational expenses. Plus, it can be loans you took out for yourself or a spouse or dependent. 

Higher earners may not be able to deduct the full amount of interest they paid, however. The maximum amount is reduced for single taxpayers with a modified adjusted gross income between $80,000 and $95,000 a year in 2024 and for married joint filers earning between $165,000 and $195,000. 

Your MAGI is equal to your adjusted gross income plus independent retirement account contributions, student loan interest, foreign earned income and other credits and deductions you may take.

The Internal Revenue Service has a worksheet to help you determine how much you’re able to deduct if your income falls in those thresholds. Taxpayers earning above those thresholds may not deduct their student loan interest payments. 

If you paid at least $600 in student loan interest in 2024, your loan servicer should send you a 1098-E form for you to report to the IRS. If you paid less than that, contact your servicer to obtain the exact amount of interest you paid during the tax year.

This deduction has been around since 1997, but there is a chance it could be eliminated under President Donald Trump’s administration. 

From the campaign trail through his first few weeks in office, President Trump has proposed extending and/or expanding tax cuts for corporations and households, but doing so would require a decrease in federal spending to offset the costs. Congress would need to identify areas to rein in government spending or bring in more revenue from taxes to keep the federal budget in balance. 

One target could wind up being the student loan interest deduction, according to a Republican Congressional memo first reported by Politico. The memo from the Ways and Means committee outlines a number of proposals, including Medicare and Affordable Care Act reforms, and estimates how much money each action could generate. The entry proposing elimination the student loan interest deduction estimates doing so could save the federal government $30 billion over 10 years. 

None of the proposals in the memo are finalized or officially included in active legislative bills yet, and for now, eligible borrowers can take advantage of the student loan interest deduction when they file their taxes.

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