Student Loan Tax Deductions

Like homeowners, students can take advantage of deducting the interest they pay on their student loans. There are many different types of loans, each with their own interest rate and pay-back rules, but the interest that accumulates on any loan designated for students, be it a private, government or institutional, can be deducted from income taxes. The maximum amount that can be deducted as student loan interest is $2,500 a year, and that number is cut down incrementally for single taxpayers making over $50,000 a year.

Beyond the standard loan interest deduction, students who are paying their way through school can also deduct up to $30,000 of tuition expenses from their taxable income. This policy is not limited to any income bracket. Also, working adults who take classes, which are paid for by their employer, can exclude any tuition assistance (up to $5,250) that their employer provides from their taxable income.