Unlock Tax Savings on Your Student Loans
Take Advantage of the Student Loan Interest Deduction
If you’re paying off student loans, you might be eligible for a valuable tax break. The student loan interest deduction allows you to deduct up to $2,500 in interest paid on eligible private or federal education debt. This could translate to a significant reduction in your 2024 tax bill.
Who Can Benefit?
Before the Covid pandemic, nearly 13 million taxpayers took advantage of this deduction. However, with the pandemic-era pause on student loan bills, many borrowers couldn’t claim the deduction. Now that interest rates on federal student loans have resumed, borrowers can once again claim the deduction.
How to Claim the 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 or student loan servicer will report your interest payments to the IRS on a 1098-E form, which you should receive a copy of. If you don’t receive the form, you can request it from your servicer.
How Much Can You Save?
Depending on your tax bracket and the amount of interest you paid, the student loan interest deduction could be worth up to $550 a year. However, there are income limits to consider. For 2024, the deduction starts to phase out for individuals with a modified adjusted gross income of $80,000, and those with a MAGI of $95,000 or more are not eligible.
Don’t Miss Out
Experts recommend that all borrowers explore whether they qualify for the deduction, as it can significantly reduce their tax liability. By taking advantage of this tax break, you can put more money back in your pocket and make progress on your student loan debt.
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