Do I need to itemise to claim this?

No. It is an above-the-line deduction, so it applies whether you itemise or take the standard deduction.

Why is my deduction less than the interest I paid?

The cap limits it first, and then the phase-out reduces whatever remains once your income enters the range.

TaxdeductionsUnited States only

Student Loan Interest Deduction Calculator

Student loan interest deduction. It is an above-the-line deduction, so it works without itemising, but it is capped and phases out over a narrow income band.

Also called: student loan interest tax deduction, form 1098-e deduction.

Deduction allowed

$2,166.67

$2,166.67 deductible of 3,200 paid, worth $476.67 at your marginal rate. The cap is 2,500 and the phase-out removes $333.33 of it. This is an above-the-line deduction, so it applies whether or not you itemise.

Tax saved

$476.67

Lost to the phase-out

$333.33

Interest above the cap

$700.00

Progress through the phase-out

13.33%

Income headroom before it disappears

$13,000.00

On the deduction type

This is an above-the-line deduction, so it applies whether or not you itemise.

How this is calculated

Computed from the published rates for the tax year you selected, which is not necessarily the current year. A calculation, not tax advice, and it does not know anything about your circumstances beyond the figures entered.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Interest paid is deductible up to a cap, then reduced proportionally as modified adjusted gross income moves through the phase-out range and disappears entirely at the top. Being above the line matters: it reduces adjusted gross income and is available whether or not you itemise, unlike most deductions. The phase-out range is narrow, so a modest raise in the wrong place can remove most of the benefit.

the capped interest is reduced proportionally across the phase-out range

P: Phase-out bounds

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

income inside the phase-out

Student loan interest paid: $3,200.00
Deduction cap: $2,500.00
Modified adjusted gross income: $82,000.00
Phase-out begins at: $80,000.00
Phase-out ends at: $95,000.00
Marginal rate: 22%

Deduction allowed$2,166.67

2,500 capped, reduced by 2,000/15,000 of the range

Open this example

income below the phase-out gets the full cap

Student loan interest paid: $3,200.00
Deduction cap: $2,500.00
Modified adjusted gross income: $60,000.00
Phase-out begins at: $80,000.00
Phase-out ends at: $95,000.00
Marginal rate: 22%

Deduction allowed$2,500.00

boundary

Open this example

Method and limits

What it assumes

A qualifying loan used solely for qualified education expenses.

What it deliberately does not model

Married filing separately cannot claim it at all.
The cap and phase-out bounds are indexed and change.
Interest paid by someone else on a loan you are not obliged on does not qualify.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Do I need to itemise to claim this?: No. It is an above-the-line deduction, so it applies whether you itemise or take the standard deduction.
Why is my deduction less than the interest I paid?: The cap limits it first, and then the phase-out reduces whatever remains once your income enters the range.