A Tax Break You Can Claim Without Itemizing

Up to $2,500 of student loan interest is deductible each year — and unlike the mortgage interest deduction, this one is an adjustment to income, so you can claim it even if you take the standard deduction. The deduction is capped at $2,500 and phases out for single filers with modified adjusted gross income between $85,000 and $100,000 (married filing jointly: $175,000 to $205,000). The benefit is worth your marginal tax rate times the deductible amount: a full $2,500 deduction at the 22% rate saves $550. Your lender reports the interest you paid on Form 1098-E, and your tax software or preparer applies the phase-out automatically.