Deductions · calculator
Student loan interest deduction for 2026
An adjustment to income worth up to $2,500 a year, and the income range where it fades away.
Student loan interest deduction
Deductible interest
$1,800
About $396 of tax saved
- Share kept after the phase-out100%
- Phase-out range$85,000 to $100,000
Capped at $2,500 a year. The deduction is an adjustment to income, so it lowers AGI too.
Interest paid on a qualified student loan is deductible up to $2,500 a year, and unlike most deductions it is an adjustment to income: it lowers AGI and is available whether you itemize or not. For 2026 the deduction starts to shrink when modified AGI passes $85,000 for a single filer or head of household and $175,000 on a joint return, and it disappears at $100,000 and $205,000 (Rev. Proc. 2025-32 section 4.29). For 2025 the joint range was $170,000 to $200,000 and the single range $85,000 to $100,000. Inside the range the reduction is proportional: a single borrower with $92,500 of modified AGI, halfway through, deducts $1,250 of $2,500 paid. Married filing separately gets no deduction, and someone claimed as a dependent cannot take it. The lender reports the interest on Form 1098-E when it reaches $600.
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How the proportional phase-out works
The IRS worksheet multiplies the interest you paid, capped at $2,500, by the share of the phase-out range your income has not yet crossed. For a single filer in 2026 the range is $15,000 wide, so every $1,500 of income above $85,000 removes a tenth of the deduction. Modified AGI here is AGI before the deduction itself, plus any foreign earned income exclusion.
| Modified AGI (single) | Share kept | Deduction on $2,500 paid |
|---|---|---|
| $80,000 | 100% | $2,500 |
| $85,000 | 100% | $2,500 |
| $88,000 | 80% | $2,000 |
| $92,500 | 50% | $1,250 |
| $97,000 | 20% | $500 |
| $100,000 | 0% | $0 |
What counts as qualified interest
The loan must have been taken out only to pay qualified education expenses (tuition, fees, books, room and board) for you, your spouse or a dependent, while enrolled at least half time in a degree program. Federal and private loans both qualify; a loan from a relative or from an employer plan does not. Interest on a refinanced student loan keeps qualifying as long as the new loan only replaced the old one. Voluntary interest payments during a deferment count in the year paid.
Payments during forgiveness programs and income-driven plans
Interest only counts when you actually pay it. On an income-driven repayment plan where the monthly payment does not cover the accrued interest, only the interest portion of what you paid is deductible; unpaid interest added to the balance becomes deductible later, when paid. Form 1098-E shows the interest your servicer received in the year, and you can deduct interest under $600 even without the form if you can document it.
Why it is worth more than it looks
Because it lowers AGI, the deduction also helps with limits measured on AGI: the earned income credit, the Roth IRA income limit, the 0.5% floor on charitable gifts. Its direct value is the deduction times your marginal rate, $550 at most in the 22% bracket. The bracket calculator shows your rate.
Source: IRS Rev. Proc. 2025-32: 2026 inflation-adjusted items and 2025 items modified by Public Law 119-21 (October 9, 2025); 2025 range: IRS Rev. Proc. 2024-40: 2025 inflation-adjusted items, read on October 11, 2026.