Try out the calculator below to determine your student loan interest deduction for the 2021 tax year, which you must file by April 2022. In 2021, the majority of borrowers paid no interest at all, so you might no longer be able to claim this deduction. But some borrowers with Department of Health student loans, FFEL loans, and private student loans could still gain
While it is possible to deduct student loan interest payments up to $2,500, there are several other rules and limitations (more on this below); how much is the student loan interest deduction actually worth to borrowers who can claim it?
What was your Modified Adjusted Gross Income (MAGI) in 2021? MAGI is a bit complicated to calculate. Your MAGI may be simialr to your AGI, but it’s generally not the same. You can use your previous year tax return to calculate your MAG However, you deduction will depend on your MAGI in the current tax filing year.
| Student Loan Interest Deduction | $1,000 |
| Estimated Federal Tax Refund | $220 |
| Estimated State Tax Refund* | $50 |
| Lower IDR Payment** | $100 |
| Total annual savings in federal and state taxes | $270 |
| Total annual savings in federal and state taxes and IDR payments | $370 |
*State income taxes are based on the assumption that a single person makes $70,000 and a married couple makes $140,000.
** The deduction for student loan interest lowers your AGI, which lowers your PAYE, REPAYE, IBR, or ICR student loan payment.
Looks like you may not be eligible! This could be because your loans are in someone else’s name, you’re being claimed as a dependent on someone else’s taxes, or your income is too high.
You can write off up to $2,500 in qualifying interest payments made during the tax year, provided you meet all the requirements to do so.
Yes, when you file your taxes in 2022, you will be able to deduct certain student loan interest payments for the 2021 tax year. But keep in mind that the majority of federal student loans had 0% interest for the entire year. In order to qualify for the student loan interest deduction in 2021, the majority of borrowers will either have FFEL loans or private student loans.
Federal and private student loans are both eligible for the deduction in terms of the different types of student loans. You must also meet all other requirements. For guidance on your particular situation, speak with a finance or accounting professional.
The maximums are an individual’s modified adjusted gross income (MAGI) of $85,000 and a joint return’s MAGI of $170,000. The tax advantages, however, start to phase out at a MAGI of $70,000 for single filers and $140,000 for joint filers.
No. You don’t need to itemize in order to claim the deduction because it is an “above-the-line deduction.”
If you’re filing separately from your spouse, you cannot use this deduction.
No. You can only deduct a combined $2,500 for you and your spouse if you file taxes jointly as a married couple.
There are a few other significant conditions to be aware of in addition to the limitations listed here. You (or a representative on your behalf) must have paid interest on a federal or private student loan that qualifies. You must be legally obligated to pay this interest (i. e. , a friend or family member who pays the interest but is not required by law to, is not eligible to deduct it.) Finally, in order to qualify, you cannot be listed as a dependent on another person’s tax return.
Yes, you can. You can deduct the interest on student loans without having to itemize your deductions.
It could, but it might not be an issue. Read more on that here.
More on the student loan interest deduction
Check out these posts from the Student Loan Planner® blog for more details on the student loan interest deduction:
FAQ
Is student loan interest still deductible in 2021?
You may be able to deduct the cost of your student loan interest on your 2021 federal tax return. A deduction lowers the portion of your income that is taxable, which may benefit you by lowering the potential tax liability.
What is the phaseout for student loan interest deduction?
If you are married and filing jointly, the student loan deduction phaseout begins at $145,000, and it ends at $175,000. The phaseout starts at $70,000 for individuals filing their own tax returns who are not dependents, and you can no longer claim the deduction if your MAGI is higher than $85,000.
Is student loan interest charged in 2021?
Until some point in 2023, most federal student loan borrowers’ payments are currently suspended, interest-free. This policy does not apply to private student loans.
What is the max student loan interest deduction?
Student Loan Interest Deduction All loans used to pay for higher education costs are eligible for this benefit (not just federal student loans). The maximum deduction is $2,500 a year.