2016 Student Loan Interest Deduction
For 2016, the Student Loan Interest Deduction is $2,500 (Maximum deduction), $65,000 (Phase-out threshold, single filers), $130,000 (Phase-out threshold, joint filers) and 2 more figures below.
| Item | Single filers | Joint filers |
|---|---|---|
| Phase-out threshold | $65,000 | $130,000 |
| Fully phased out | $80,000 | $160,000 |
Effective 2016-01-01Source: Rev. Proc. 2015-53 (IRS)Verified 2026-08-29
Who it applies to
Taxpayers who pay interest on qualified education loans and wish to claim an above-the-line deduction.
What changed this year, and why
For taxable years beginning in 2016, the IRS updated the income thresholds for the student loan interest deduction under IRC § 221.
Common questions
- What is the maximum student loan interest deduction for 2016?
- The maximum deduction is $2,500 in interest paid on qualified education loans.
- At what income level does the deduction begin to phase out?
- For single filers, the phase-out begins when modified adjusted gross income exceeds $65,000. For married couples filing jointly, it begins at $130,000.
- At what income level is the deduction completely eliminated?
- For single filers, the deduction is fully phased out at $80,000 of modified adjusted gross income. For married couples filing jointly, it is fully phased out at $160,000.
How the deduction is reduced inside the phase-out range
The phaseout arithmetic determines how much of your student loan interest deduction gets reduced when your modified adjusted gross income (MAGI) falls within the phaseout range. If your MAGI is between the lower threshold and the upper threshold, your deduction is reduced by a fraction rather than eliminated entirely. To calculate the reduced deduction, you multiply your interest deduction amount (before applying the phaseout, but capped at the maximum allowed) by a fraction. The numerator of this fraction is your MAGI minus the applicable threshold amount, which depends on your filing status. The denominator is the dollar amount of the phaseout range itself, which also varies by filing status. After calculating this multiplication result, you subtract it from your original deduction amount to arrive at the final deductible amount you can claim. This means the deduction phases out gradually across the income range rather than disappearing all at once when you hit a specific income level. The calculation ensures that taxpayers with MAGI closer to the lower end of the phaseout range receive a larger deduction than those closer to the upper end.
If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. To figure the phaseout, multiply your interest deduction (before the phaseout, but not more than $2,500) by a fraction. The numerator (top part) is your MAGI minus $65,000 ($130,000 in the case of a joint re- turn). The denominator (bottom part) is $15,000 ($30,000 in the case of a joint return).
Publication 970 (2016), Tax Benefits for Education (IRS)
The income the phase-out is measured on
The phase-out for the student loan interest deduction is based on modified adjusted gross income (MAGI), which is a specific measure of income used to determine eligibility. For most taxpayers filing Form 1040, MAGI is the adjusted gross income shown on their federal income tax return before subtracting any deduction for student loan interest. This means you add back the student loan interest deduction you would otherwise claim to calculate the income figure used for the phase-out test. The deduction is fully available if MAGI is below $65,000 for single filers or $130,000 for joint filers. The deduction phases out gradually between those thresholds and $80,000 for single filers or $160,000 for joint filers, and is completely eliminated once MAGI reaches those upper limits.
For most taxpayers, MAGI is the adjus- ted gross income as figured on their federal income tax re- turn before subtracting any deduction for student loan in- terest.
Publication 970 (2016), Tax Benefits for Education (IRS)
Who can claim the deduction
To claim the student loan interest deduction, you must meet all of several specific requirements. Your filing status cannot be married filing separately, meaning only single, head of household, qualifying widow(er), or married filing jointly taxpayers qualify. Additionally, no other taxpayer can claim you as a dependent on their tax return. You must be legally obligated to pay interest on a qualified student loan under the loan terms, and you must have actually paid interest on such a loan during the tax year. The deduction is available as an adjustment to income, which means you can claim it even if you take the standard deduction instead of itemizing. The maximum deduction is $2,500, but this amount phases out for taxpayers with modified adjusted gross income between $65,000 and $80,000 for single filers, or between $130,000 and $160,000 for married couples filing jointly.
Your filing status is any filing status except married fil- ing separately.
Publication 970 (2016), Tax Benefits for Education (IRS)
Payments that do not count as student loan interest
Certain payments related to student loans do not qualify as deductible interest. You cannot claim a deduction for interest paid on a loan if you are not legally obligated to make interest payments under the loan terms. Loan origination fees also do not count as interest if they are payments for property or services provided by the lender, such as commitment fees or processing costs, rather than fees for the use of money. Additionally, interest paid on a loan is not deductible to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program or certain other loan repayment assistance programs. Only payments that constitute true interest on a qualified student loan, where you have a legal obligation to pay and the payments come from your own funds, qualify for the deduction. The maximum deduction remains $2,500, subject to the phase-out based on modified adjusted gross income.
Interest you paid on a loan if, under the terms of the loan, you aren't legally obligated to make interest pay- ments. Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs.
Publication 970 (2016), Tax Benefits for Education (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2015-53 (IRS)
- Maximum deduction
For taxable years beginning in 2016, the $2,500 maximum deduction for interest paid on qualified education loans under § 221 begins to phase out
- Phase-out threshold, single filers
phase out under § 221(b)(2)(B) for taxpayers with modified adjusted gross income in excess of $65,000
- Phase-out threshold, joint filers
for taxpayers with modified adjusted gross income in excess of $65,000 ($130,000 for joint returns)
- Fully phased out, single filers
is completely phased out for taxpayers with modified adjusted gross income of $80,000 or more ($160,000 or more for joint returns).
- Fully phased out, joint filers
is completely phased out for taxpayers with modified adjusted gross income of $80,000 or more ($160,000 or more for joint returns).