Student Loan Interest Deduction

§ 221. Interest on education loans(a) Allowance of deductionIn the case of an individual, there shall be allowed as a deduction for the taxable year an amount equal to the interest paid by the taxpayer during the taxable year on any qualified education loan. (b) Maximum deduction(1) In generalExcept as provided in paragraph (2), the deduction allowed by subsection (a) for the taxable year shall not exceed $2,500. (2) Limitation based on modified adjusted gross income(A) In generalThe amount which would (but for this paragraph) be allowable as a deduction under this section shall be reduced (but not below zero) by the amount determined under subparagraph (B). (B) Amount of reductionThe amount determined under this subparagraph is the amount which bears the same ratio to the amount which would be so taken into account as—(i) the excess of—(I) the taxpayer’s modified adjusted gross income for such taxable year, over (II) $50,000 ($100,000 in the case of a joint return), bears to (ii) $15,000 ($30,000 in the case of a joint return). (C) Modified adjusted gross incomeThe term “modified adjusted gross income” means adjusted gross income determined—(i) without regard to this section and sections 85(c) 11 So in original. Probably should be followed by a comma. 911, 931, and 933, and (ii) after application of sections 86, 135, 137, 219, and 469. (c) Dependents not eligible for deductionNo deduction shall be allowed by this section to an individual for the taxable year if a deduction under section 151 with respect to such individual is allowed to another taxpayer for the taxable year beginning in the calendar year in which such individual’s taxable year begins. (d) DefinitionsFor purposes of this section—(1) Qualified education loanThe term “qualified education loan” means any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses—(A) which are incurred on behalf of the taxpayer, the taxpayer’s spouse, or any dependent of the taxpayer as of the time the indebtedness was incurred, (B) which are paid or incurred within a reasonable period of time before or after the indebtedness is incurred, and (C) which are attributable to education furnished during a period during which the recipient was an eligible student. Such term includes indebtedness used to refinance indebtedness which qualifies as a qualified education loan. The term “qualified education loan” shall not include any indebtedness owed to a person who is related (within the meaning of section 267(b) or 707(b)(1)) to the taxpayer or to any person by reason of a loan under any qualified employer plan (as defined in section 72(p)(4)) or under any contract referred to in section 72(p)(5).