Student Loan Interest Deduction
Definition
An above-the-line deduction of up to $2,500 for interest paid on qualified student loans. You can claim this deduction even if you don't itemize. The deduction phases out at MAGI between $80,000 and $95,000 ($165,000 and $195,000 for joint filers). To qualify, the loan must have been taken out solely to pay qualified education expenses, and you can't be claimed as a dependent on someone else's return.
Example
If you paid $3,000 in student loan interest and your MAGI is $60,000, you can deduct $2,500 (the maximum), reducing your taxable income and saving approximately $550 in the 22% bracket.
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