United States · Federal · Education deductions
Student loan interest deduction limit 2027.
How much student loan interest you can deduct for 2027 and the income range in which the $2,500 deduction shrinks to zero.
Short answer: The student loan interest deduction for 2027 is up to $2,500. It begins to phase out at modified adjusted gross income of $90,000 for single filers and $180,000 for joint filers, and is gone at $105,000 or $210,000. Married filing separately gets no deduction.
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The deduction in short
Section 221 lets you deduct interest you paid on a qualified education loan, up to $2,500 a year, even if you do not itemize. The loan has to be for qualified higher education expenses of you, your spouse or your dependent. The dollar cap is fixed in the statute; what is indexed each year is the income at which the deduction starts to phase out. Revenue Procedure 2026-35 sets those amounts for 2027.
| Filing status | Phase-out starts 2026 | Phase-out starts 2027 | Gone at 2026 | Gone at 2027 |
|---|---|---|---|---|
| Single, head of household | $85,000 | $90,000 | $100,000 | $105,000 |
| Married filing jointly | $175,000 | $180,000 | $205,000 | $210,000 |
How the phase-out is computed
The statute reduces the otherwise allowable deduction by the fraction that your modified adjusted gross income exceeds the starting amount, divided by $15,000 ($30,000 on a joint return). So the deduction falls evenly across the range. Modified adjusted gross income here is adjusted gross income figured without the student loan interest deduction itself, without the foreign income exclusions, and after taking into account certain other items, as section 221(b)(2)(C) defines it.
Who cannot claim it
Section 221(c) bars the deduction if someone else can claim you as a dependent, and section 221(e)(2) says a married taxpayer can claim it only on a joint return, so married filing separately gets nothing. Section 221(e)(1) also denies a double benefit: you cannot deduct interest that another provision already covers, or interest your employer paid on your loan if you excluded that payment under section 127.
What changed from 2026
The $2,500 cap did not change. The whole phase-out range moved up by $5,000. For single filers it went from $85,000 to $100,000 in 2026 to $90,000 to $105,000 in 2027, and for joint filers from $175,000 to $205,000 to $180,000 to $210,000. A single filer with $87,000 of income lost part of the deduction in 2026 but keeps all of it in 2027.
Worked example (2027)
A single filer paid $2,500 of student loan interest in 2027 and has modified adjusted gross income of $97,500. That is $7,500 over the $90,000 start, which is half of the $15,000 range, so the deduction is cut by 50 percent to $1,250. A joint filer paid $3,000 of interest and has $195,000 of income: the allowable amount is capped at $2,500, income is $15,000 over $180,000, half of the $30,000 range, and the deduction is $1,250. At $105,000 single or $210,000 joint the deduction is zero.
Common mix-ups
- $2,500 is a cap, not a credit. It reduces income; it does not reduce tax dollar for dollar.
- It is above the line. You can take it without itemizing.
- The range depends on filing status. The joint range is twice as wide.
- Married filing separately is out. A married taxpayer can claim the deduction only on a joint return.
- No double benefit. Interest an employer paid on your loan under a section 127 exclusion cannot also be deducted.
Method
The tool caps your interest at $2,500, finds how far your income is above the starting amount for your filing status, divides by the range ($15,000 or $30,000), and removes that share of the capped interest. It returns zero for married filing separately. It uses the income you enter as modified adjusted gross income without recomputing it. Figures were read on November 9, 2026.
What this does not cover
- Whether a loan counts as a qualified education loan.
- Computing modified adjusted gross income from your return.
- State deductions for student loan interest.
Figures read from the sources below on November 9, 2026. Last updated November 9, 2026.
Sources
- IRS Revenue Procedure 2026-35, section 3.31 (interest on education loans) (retrieved November 9, 2026)
- IRS Revenue Procedure 2025-32, section 4.29 (the 2026 amount) (retrieved November 9, 2026)
- 26 U.S.C. section 221 (interest on education loans), text at Cornell Legal Information Institute (retrieved November 9, 2026)
Frequently asked questions
What is the student loan interest deduction for 2027?
Up to $2,500 of interest paid on a qualified education loan, reduced for higher incomes.
At what income does it phase out in 2027?
It begins to phase out at modified adjusted gross income of $90,000 ($180,000 joint) and is gone at $105,000 ($210,000 joint).
What was the 2026 phase-out?
From $85,000 to $100,000 for single filers and from $175,000 to $205,000 for joint filers.
Do I need to itemize to take it?
No. It is a deduction in computing adjusted gross income, so it is available to people who take the standard deduction.
Can I deduct it if I am married filing separately?
No. Section 221(e)(2) allows a married taxpayer to claim it only on a joint return.
Can I deduct interest my employer paid for me?
Not if you excluded the payment from income under section 127; section 221(e)(1) denies the double benefit.
Does the phase-out reduce the deduction evenly?
Yes. The reduction is the fraction of income above the starting amount over $15,000, or $30,000 for joint filers.
Not legal or tax advice
This page is general information from an unofficial guide, not legal, payroll or tax advice. Tax law changes and your facts may differ. Confirm figures with the IRS or a tax professional before you file or set payroll. Nothing you type is sent anywhere.