Taxes and college savings · calculator
Student loan interest deduction for 2026
For tax year 2026 you can deduct up to $2,500 of interest paid on qualified student loans, and the deduction starts shrinking once modified adjusted gross income passes $85,000 for a single filer or $175,000 on a joint return; it disappears at $100,000 and $205,000. Those thresholds come from IRS Revenue Procedure 2025-32, which adjusts them for inflation each year; the $2,500 ceiling is fixed by section 221 of the tax code and has not moved. A single borrower with $72,000 of income who paid $1,800 of interest deducts all of it, which in the 22% bracket lowers federal tax by about $396. The deduction is taken above the line, on Schedule 1, so you get it with the standard deduction and do not need to itemize. Married couples filing separately cannot claim it at all. Your servicer reports the interest you paid on Form 1098-E. This calculator applies the 2026 phase-out to your figures and estimates the tax saved at your bracket.
Deduction for tax year 2026
$1,800
About $396 less federal tax at 22%
| Interest counted (capped) | $1,800 |
| Phase-out reduction | $0 |
| Phase-out range for your status | $85,000 to $100,000 |
Up to $2,500, reduced between $85,000 and $100,000 of modified AGI; claimed without itemizing. How this is calculated.
How much of the interest you pay on student loans in 2026 comes off your taxable income, and what that saves.
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The deduction at different incomes
The table applies the 2026 rules to a borrower who paid $2,500 or more of interest. Below the phase-out the full amount comes off income; inside it, the deduction falls in a straight line; above it, nothing is left.
| Modified AGI | Single filer | Married filing jointly |
|---|---|---|
| $60,000 | $2,500 | $2,500 |
| $85,000 | $2,500 | $2,500 |
| $92,500 | $1,250 | $2,500 |
| $100,000 | $0 | $2,500 |
| $175,000 | $0 | $2,500 |
| $190,000 | $0 | $1,250 |
| $205,000 | $0 | $0 |
How the reduction is computed
The IRS rule is proportional. Take the share of the phase-out range your modified AGI has crossed, multiply it by your deductible interest (capped at $2,500), and subtract. A couple filing jointly with $190,000 of modified AGI is halfway through the $175,000 to $205,000 range, so a $2,500 interest bill leaves a deduction of $1,250. Modified AGI here means adjusted gross income before this deduction, with certain excluded foreign income added back (26 U.S.C. 221(b)).
Who reaches the $2,500 cap
Interest falls as a balance is repaid, so the cap matters most in the early years of large loans. At the 2026-27 rates, a first year of repayment on $30,000 of undergraduate loans at 6.52% carries roughly $1,956 of interest, already near the cap, and $80,000 of graduate loans at 8.07% carry about $6,456, far above it. Borrowers on the Repayment Assistance Plan should note a quirk: interest that RAP waives was never paid, so it is not deductible; only the interest part of your actual payments counts, as reported on the 1098-E.
What changed for 2026, and what did not
The 2025 law did not change section 221: the $2,500 ceiling is written into the statute and is not indexed for inflation. The phase-out range moves each year with inflation; Revenue Procedure 2025-32 set the 2026 figures (IRS Rev. Proc. 2025-32, section 4.29). Two neighboring rules did change. Employer payments of student loans under section 127 became permanent, up to $5,250 a year and indexed from 2027, and the exclusion of forgiven debt was narrowed to death and disability discharges. Employer student loan repayment and taxes on forgiveness cover those.
Filing tips
Add up the interest from every 1098-E if you have several servicers, and add interest paid to a private lender, which sends its own form. Interest paid by someone else on your behalf, such as a parent paying your loan, is treated as paid by you if you are the borrower and not claimed as a dependent. Keep the forms with your return. If a deduction lowers your AGI below a RAP bracket line, your loan payment can fall the next year too: the RAP calculator shows the bracket edges.