2021 Student Loan Interest Deduction
For 2021, the Student Loan Interest Deduction is $2,500 (Maximum deduction), $70,000 (Phase-out threshold, single filers), $140,000 (Phase-out threshold, joint filers) and 2 more figures below.
| Item | Single filers | Joint filers |
|---|---|---|
| Phase-out threshold | $70,000 | $140,000 |
| Fully phased out | $85,000 | $170,000 |
Effective 2021-01-01Source: Rev. Proc. 2020-45 (IRS)Verified 2026-08-29
Compared with 2020
Every figure on this page is unchanged from 2020.
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Maximum deduction | $2,500 | $2,500 | +$0 (+0.0%) |
| Phase-out threshold, single filers | $70,000 | $70,000 | +$0 (+0.0%) |
| Phase-out threshold, joint filers | $140,000 | $140,000 | +$0 (+0.0%) |
| Fully phased out, single filers | $85,000 | $85,000 | +$0 (+0.0%) |
| Fully phased out, joint filers | $170,000 | $170,000 | +$0 (+0.0%) |
Who it applies to
Taxpayers who paid interest on qualified education loans and claim the student loan interest deduction on their 2021 federal income tax return
What changed this year, and why
The 2021 Student Loan Interest Deduction allows a maximum deduction of $2,500 for interest paid on qualified education loans. The deduction phases out for single filers with modified adjusted gross income between $70,000 and $85,000, and for joint filers with modified adjusted gross income between $140,000 and $170,000. These amounts are the same as in 2020.
Common questions
- How does the phase-out work?
- The phase-out is based on modified adjusted gross income (MAGI). For single filers, the deduction phases out between $70,000 and $85,000 of MAGI. For joint filers, it phases out between $140,000 and $170,000 of MAGI. Taxpayers whose MAGI exceeds the upper limit cannot claim the deduction.
How the deduction is reduced inside the phase-out range
For 2021, the student loan interest deduction is reduced when modified adjusted gross income (MAGI) falls inside the phase-out range. The range is $15,000 wide for single filers and $30,000 wide for joint filers. Inside the range, the taxpayer first identifies a tentative deduction, which is the interest paid capped at the maximum deduction of $2,500. That amount is then multiplied by a fraction. The numerator of the fraction is the taxpayer's MAGI minus $70,000 for single filers or $140,000 for joint filers. The denominator is $15,000 for single filers or $30,000 for joint filers. The product of the tentative deduction and this fraction is the reduction amount. Subtracting the reduction from the tentative deduction gives the final deductible amount. When MAGI reaches or exceeds $85,000 for single filers or $170,000 for joint filers, the fraction equals or exceeds the full amount and the deduction is reduced to zero.
The numerator (top part) is your MAGI minus $70,000 ($140,000 in the case of a joint re- turn). The denominator (bottom part) is $15,000 ($30,000 in the case of a joint return). Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct.
Publication 970 (2021), Tax Benefits for Education (IRS)
The income the phase-out is measured on
The phaseout for the student loan interest deduction is measured against modified adjusted gross income, or MAGI. For most taxpayers filing Form 1040, MAGI is simply the adjusted gross income shown on the return before subtracting any deduction for student loan interest. In other words, you add back the very deduction you are computing when you arrive at the income figure used in the phaseout formula. For filers of Form 1040-NR, MAGI is the AGI on line 11 of that form, also figured without taking into account any student loan interest deduction amount on Schedule 1. Because the deduction itself is excluded from MAGI, a taxpayer cannot push themselves below the phaseout threshold by claiming the deduction; the income test is applied on a pre-deduction basis using the verified thresholds of $70,000 single and $140,000 joint, with full phaseout at $85,000 and $170,000 respectively.
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 (2021), Tax Benefits for Education (IRS)
Who can claim the deduction
To claim the student loan interest deduction, a taxpayer must satisfy every one of four conditions. First, the filing status must be any status other than married filing separately, so a married person filing a separate return is ineligible regardless of income. Second, no other taxpayer may claim the person as a dependent on his or her return; being listed as a dependent on someone else's federal income tax return disqualifies the claim entirely. Third, the person must be legally obligated to pay interest on a qualified student loan under the terms of the loan. Fourth, the person must have actually paid interest on that qualified student loan during the tax year. All four tests must be met; failing any single one means the deduction cannot be claimed, even if interest was paid and income is below the $70,000 single or $140,000 joint phase-out thresholds. The maximum deduction available to a qualifying taxpayer is $2,500, subject to the income-based phase-out.
Generally, you can claim the deduction if all of the follow- ing requirements are met. • Your filing status is any filing status except married fil- ing separately. • No one else is claiming you as a dependent on his or her tax return. • You are legally obligated to pay interest on a qualified student loan. • You paid interest on a qualified student loan.
Publication 970 (2021), Tax Benefits for Education (IRS)
Payments that do not count as student loan interest
Certain amounts that might look like student loan interest cannot be counted toward the $2,500 deduction. The IRS lists three categories that must be excluded. First, interest paid on a loan is not deductible to the extent the taxpayer is not legally obligated to make interest payments under the loan's terms. Second, loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs, do not qualify as interest, even though they are charged at the time the loan is made. Third, interest paid on a loan is not deductible to the extent the payments were made through participation in the National Health Service Corps Loan Repayment Program or certain other loan repayment assistance programs. Each of these categories describes a situation where a payment either is not truly interest, is a fee for services rather than for the use of money, or is funded through a program that already provides tax-free assistance.
Don't Include as Interest You can't claim a student loan interest deduction for any of the following items. • 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. • Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the NHSC Loan Repayment Program) or certain other loan repayment assistance programs.
Publication 970 (2021), 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. 2020-45 (IRS)
- Maximum deduction
For taxable years beginning in 2021, the $2,500 maximum deduction for interest paid on qualified education loans under § 221 begins to phase out
- Phase-out threshold, single filers
begins to phase out under § 221(b)(2)(B) for taxpayers with modified adjusted gross income in excess of $70,000
- Phase-out threshold, joint filers
for taxpayers with modified adjusted gross income in excess of $70,000 ($140,000 for joint returns)
- Fully phased out, single filers
is completely phased out for taxpayers with modified adjusted gross income of $85,000 or more ($170,000 or more for joint returns).
- Fully phased out, joint filers
is completely phased out for taxpayers with modified adjusted gross income of $85,000 or more ($170,000 or more for joint returns).