Student Loan Interest Deduction 2027 $2,500 Cap Calculator
Calculate the 2027 above-the-line student loan interest deduction (max $2,500) with MAGI phaseout brackets.
Student Loan Interest Deduction Basics
Up to $2,500 of student loan interest is deductible above-the-line on Schedule 1 — meaning you don't need to itemize. For 2027, the cap remains $2,500 per return (not per loan, not per spouse). MAGI phaseout for 2027 (projected): single starts at ~$80,000 phasing out at ~$95,000; MFJ starts at ~$170,000 phasing out at ~$200,000. MFS gets ZERO deduction regardless. Source: IRC §221, Rev. Proc. 2024-40. Last updated: May 2026.
What Qualifies as Student Loan Interest
Interest on loans taken for qualified higher education expenses (tuition, books, room and board, fees) at an eligible institution for you, your spouse, or your dependent. Both federal and private student loans qualify. Refinanced loans qualify if they retain the educational purpose. Origination fees you paid count as interest, amortized over loan life.
Above-the-Line: A Special Tax Win
Unlike most deductions, you DO NOT need to itemize to claim student loan interest. It's deducted from gross income before calculating AGI — meaning it reduces both your tax AND your AGI-based phase-outs (Saver's Credit, IRA deduction, ACA premium tax credit). The dollar value is multiplied by these knock-on benefits.
Strategies to Preserve the Deduction
(1) If your MAGI is near the phaseout, max pre-tax 401(k) to reduce MAGI. (2) HSA contributions also reduce MAGI. (3) For married couples, MFS forfeits the deduction — only choose MFS for specific other reasons. (4) Parents can deduct interest they pay on a child's loan only if the parent is legally obligated on the loan.