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Education Loan Deduction

YOU CAN DEDUCT the interest charged on your education loans, just like you can deduct the interest on a mortgage and on margin loans. But in the case of education loans, the tax break comes with limitations.

Under current rules, in 2018 and 2019, you can only deduct up to $2,500 in interest on qualified education loans. The ability to claim the deduction is subject to an income test. In 2018, the deduction phases out if your modified adjusted gross income is between $135,000 and $165,000 and you’re married filing jointly, or between $65,000 and $80,000 and you’re single or you file as head of household. In 2019, the phaseout range is $140,000 to $170,000 for couples and $70,000 to $85,000 for singles and heads of household. You can’t claim the deduction if your tax-filing status is married filing separately.

Some good news: The deduction is claimed directly on your 1040, the main page of your federal tax return. That means you can get the tax savings even if you don’t itemize your deductions on Schedule A.

Next: Opportunity Tax Credit

Previous: Repaying Education Loans

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