How much student loan interest can be deducted as an adjustment to income?

The deduction for student loan interest allows eligible taxpayers to deduct up to $2,500 of interest paid on qualified student loans during the tax year as an adjustment to income. This means that it can reduce your taxable income without having to itemize deductions, making it beneficial for many taxpayers.

The amount that can be deducted phases out for higher-income individuals, but for those who qualify based on income requirements, the full amount up to $2,500 is available. Qualifying loans must have been taken out solely to pay for qualified education expenses for the taxpayer, their spouse, or their dependents, and the taxpayer must also meet certain criteria regarding filing status and income.

This deduction is advantageous because it directly reduces the amount of taxable income, potentially lowering the overall tax liability. It's important for students and graduates to be aware of this opportunity to help ease the financial burden of repaying their education loans.