Updated October 30, 2026. Quick answer: For tax year 2026 the student loan interest deduction is at most $2,500. It begins to phase out when modified adjusted gross income (MAGI) is over $85,000 ($175,000 for joint returns) and is gone at $100,000 or more ($205,000 or more for joint returns), per IRS Revenue Procedure 2025-32. The 2027 version is on the student loan interest deduction for 2027.
The 2026 figures
Revenue Procedure 2025-32 says: “For taxable years beginning in 2026, the $2,500 maximum deduction for interest paid on qualified education loans under § 221 begins to phase out under § 221(b)(2)(B), as adjusted for inflation, for taxpayers with modified adjusted gross income in excess of $85,000 ($175,000 for joint returns), and is completely phased out for taxpayers with modified adjusted gross income of $100,000 or more ($205,000 or more for joint returns).”
| Filing status | Phase-out begins (MAGI) | Fully phased out (MAGI) |
|---|---|---|
| Single and head of household | Over $85,000 | $100,000 or more |
| Married filing jointly | Over $175,000 | $205,000 or more |
What the statute says
Section 221(a) allows the deduction: “In the case of an individual, there shall be allowed as a deduction for the taxable year an amount equal to the interest paid by the taxpayer during the taxable year on any qualified education loan.” The ceiling is in subsection (b)(1): “Except as provided in paragraph (2), the deduction allowed by subsection (a) for the taxable year shall not exceed $2,500.”
The loan must be a qualified education loan, defined as “any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses”. Paragraph (2) then reduces the deduction by income: “The amount which would (but for this paragraph) be allowable as a deduction under this section shall be reduced (but not below zero) by the amount determined under subparagraph (B).”
A worked example
The reduction grows in proportion across the range. For a single filer the range is $85,000 to $100,000, which is 15,000 wide (100,000 minus 85,000, computed). With $92,500 (invented, for the computation) of MAGI the filer is 7,500 into the range (92,500 minus 85,000), halfway. If that filer paid at least $2,500 of qualifying interest, the deduction is 2,500 times (1 minus 0.5), or $1,250 (computed). This is a proportional illustration of the statute’s ratio; the IRS worksheet in IRS Publication 970 gives the exact figure. The lender’s reporting form is covered on the Form 1098-E box 1 and box 2 page, and the Schedule 1 line for the deduction is covered on Schedule 1 lines 21 to 23.
Common mistakes
- Treating $2,500 as the deduction for everyone. It is a ceiling: the statute says the deduction shall not exceed $2,500, and it cannot exceed the interest actually paid.
- Using the single range for a joint return. The joint range for 2026 is over $175,000 up to $205,000.
- Carrying the 2026 income range to a 2027 return. The next range is on its own page.
Related: the student loan interest deduction for 2027, the Form 1098-E box 1 and box 2 page, Schedule 1 lines 21 to 23, and IRS Publication 970.
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Answer againSources
- Internal Revenue Service, Rev. Proc. 2025-32, tax year 2026 inflation-adjusted amounts, as modified by the One, Big, Beautiful Bill Act: www.irs.gov
- 26 U.S.C. 221, Interest on education loans (U.S. Code, 2024 edition, U.S. Government Publishing Office): www.govinfo.gov
Read from the primary documents linked above on October 30, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.