Tax form 1098-E shows how much you paid in interest during a given tax year for a qualifying student loan. Eligible filers can deduct up to $2,500 in student loan interest from their taxable income.
If you have student loans, you may be able to lower your taxable income by deducting some of the interest you paid throughout the year, with the student loan interest deduction.
Student loan servicers may send you tax form 1098-E via the mail, email, or through your online account portail. This form will show how much interest you paid throughout the year. If you paid less than $600 in interest, you may not receive this form.
To qualify for this full tax deduction, a single filer’s adjusted gross income must be under $70,000. You may receive partial credit if your AGI is between $70,000 and $85,000. Married, joint filers can receive the full credit if their combined AGI is less than $145,000 and may receive partial credit if their AGI is between $145,000 and $175,000.
However, it’s unlikely that this tax deduction will be helpful when filing your 2022 taxes. That’s because federal student loan payments are paused and interest rates for qualifying federal student loans remain at 0% through June 30, 2023. Federal student loan payments have been paused spring of 2020, at the start of the COVID-19 pandemic.
This means, even if you are paying your student loans, you may not have paid any interest for the past few years.
If payments resume in the summer, interest rates will no longer sit at 0% and this tax deduction may then apply to your 2023 tax return, which you’ll file in 2024.