The $2,500 cap, the MAGI phase-out, and what your deduction is actually worth
| Filing Status | 2025 Full → Zero | 2026 Full → Zero |
|---|---|---|
| Single / Head of household | $85,000 → $100,000 | $85,000 → $100,000 |
| Married filing jointly | $170,000 → $200,000 | $175,000 → $205,000 |
The window is $15,000 wide for singles and $30,000 for joint filers. Every dollar of MAGI inside the window costs you 1/15,000th (single) or 1/30,000th (MFJ) of the deduction. The $2,500 cap itself is not inflation-indexed and hasn't moved since 2019.
| MAGI | Phase-Out Kept | Deduction | Tax Savings |
|---|---|---|---|
| $80,000 | 100% | $2,500 | $550 |
| $85,000 | 100% | $2,500 | $550 |
| $90,000 | 67% | $1,667 | $367 |
| $92,500 | 50% | $1,250 | $275 |
| $95,000 | 33% | $833 | $183 |
| $97,500 | 17% | $417 | $92 |
| $100,000 | 0% | $0 | $0 |
Note the mechanic: the phase-out cuts the capped amount, not your actual interest. At $95,000 MAGI you may have paid $3,000 in interest, but you're deducting 33% of $2,500, not 33% of $3,000.
Student loan interest is one of the few deductions you can take without itemizing — it adjusts your income directly on Schedule 1, so renters and standard-deduction filers get the full benefit. The catch is the cap and the income phase-out, and this calculator applies both.
Base amount = the interest you paid, capped at $2,500. Phase-out fraction = 1 − (MAGI − lower threshold) ÷ window width, clamped between 0 and 1. Your deduction = base × fraction. Tax savings = deduction × marginal rate. For 2026, single filers phase out from $85,000 to $100,000 of MAGI ($15,000 window); joint filers from $175,000 to $205,000 ($30,000 window). At $92,500 single, the fraction is 1 − 7,500/15,000 = 50%.
Pull the interest figure from Form 1098-E (servicers must issue it if you paid $600 or more). For MAGI, most W-2 filers can just use AGI from line 11 of their 1040 — the add-backs (foreign income exclusions and a couple of rare items) don't apply to most people. Slide the MAGI control and watch where the deduction dies; the marker on the gradient bar shows where you sit in the window. Traditional 401(k) and HSA contributions lower AGI, which is why a raise that pushes you into the phase-out can sometimes be offset by deferring more.
A single borrower paid $2,800 of interest in the tax year and has MAGI of $85,000, in the 22% bracket. The cap trims $2,800 to $2,500. MAGI sits at the bottom of the phase-out window, so the fraction is 100%. Deduction: $2,500, worth $550 of tax savings — above the line, no itemizing needed.
Nudge the same borrower to $92,500 of MAGI. Fraction: 1 − (92,500 − 85,000) ÷ 15,000 = 50%. Deduction: $2,500 × 50% = $1,250, worth $275 at 22%. At $100,000 the deduction is gone entirely.
Joint filers get twice the window. A couple with $1,800 of interest and $195,000 MAGI keeps 1 − (195,000 − 175,000) ÷ 30,000 = 33.3%, for a $600 deduction worth $144 at a 24% bracket. Below $175,000 they'd have the full $1,800; above $205,000, nothing.
Up to $2,500 a year per tax return, no matter how much interest you actually paid. If you paid $2,800 in interest, your deduction is still capped at $2,500. The cap applies to combined interest on qualified education loans for you, your spouse, and your dependents — it's a per-return limit, not per-person or per-loan.
For 2026, the deduction phases out between $85,000 and $100,000 of MAGI for single filers and between $175,000 and $205,000 for married filing jointly. Below the lower number you get the full deduction (up to the $2,500 cap); above the upper number you get nothing; in between it shrinks proportionally. For 2025 the MFJ window was $170,000-$200,000.
No — and this is the good news. It's an above-the-line adjustment to income, so you claim it on Schedule 1 whether you itemize or take the standard deduction. You don't need mortgage interest or charitable gifts to benefit; even a renter taking the standard deduction gets the full value.
Modified adjusted gross income is your AGI with a few add-backs — most commonly foreign earned income exclusion and certain exclusions from income. For most W-2 borrowers MAGI is simply the AGI on line 11 of Form 1040. If you contribute to a traditional 401(k) or HSA, those lower your AGI and pull your MAGI back toward the full deduction.
No. You can't take the deduction if someone else claims you as a dependent on their return, even if the loans are in your name and you personally paid the interest. The deduction also requires the loan to be a qualified education loan — one taken for you, your spouse, or a dependent at an eligible institution — and not from a related person or an employer plan.
Your servicer issues Form 1098-E if you paid at least $600 in interest during the year, and you can deduct interest shown there plus anything above $600 you can substantiate. Unlike vehicle donations, you don't attach the form — just keep it with your records in case of an audit.