Maximize Your Tax Deductions with Student Loan Interest
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Did you know your student loan payments could benefit you come tax time in 2024?
The student loan interest deduction allows eligible borrowers to deduct up to $2,500 per year in interest paid on qualifying private or federal education debt. During the pandemic pause on student loan bills, many borrowers couldn’t claim this deduction as there were no accruing interest charges on federal loans.
However, interest started accruing again in September 2023, making borrowers eligible to claim the deduction for the full tax year.
It’s important to explore if you qualify for this deduction, as it can lower your tax liability, says Betsy Mayotte, president of The Institute of Student Loan Advisors.
Get Up to $550 Back with the Student Loan Interest Deduction
The student loan interest deduction is an “above the line” deduction, meaning you don’t need to itemize your taxes to claim it. Your lender will provide your interest payment details to the IRS on a form called a 1098-E, which you should receive a copy of as well.
Depending on your tax bracket and interest paid, you could get back up to $550 per year with this deduction. However, there are income limits for eligibility.
The deduction begins to phase out for individuals with a modified adjusted gross income of $80,000 in 2024. Those with a MAGI of $95,000 or more are ineligible. For married couples filing jointly, the phaseout starts at $165,000, with a MAGI of $195,000 or more making them ineligible.