Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 412(a)(1), redesignated subsec. (g) as (f).
Final rules 1
(a) Allowance of deduction In 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.
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(b) Maximum deduction
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(1) In general Except as provided in paragraph (2), the deduction allowed by subsection (a) for the taxable year shall not exceed $2,500.
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295 substituted “shall not exceed $2,500.” for “shall not exceed the amount determined in accordance with the following table:” and table of amounts for taxable years 1998 to 2001 and thereafter.
(2) Limitation based on modified adjusted gross income
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(A) In general The 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 reduction The amount determined under this subparagraph is the amount which bears the same ratio to the amount which would be so taken into account as—
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(i) the excess of—
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 412(b)(1), amended cls. (i) and (ii) generally. Prior to amendment, cls. (i) and (ii) read as follows:
- 2001 “(i) the excess of—
“(I) the taxpayer’s modified adjusted gross income for such taxable year, over
“(II) $40,000 ($60,000 in the case of a joint return), bears to
- 2001 “(ii) $15,000.”
(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).
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 412(b)(1), amended cls. (i) and (ii) generally. Prior to amendment, cls. (i) and (ii) read as follows:
- 2001 “(i) the excess of—
“(I) the taxpayer’s modified adjusted gross income for such taxable year, over
“(II) $40,000 ($60,000 in the case of a joint return), bears to
- 2001 “(ii) $15,000.”
(C) Modified adjusted gross income The term “modified adjusted gross income” means adjusted gross income determined—
Amended 1998
- 1998 Pub. L. 105-277 Pub. L. 105–277, § 4003(a)(2)(A)(iii), struck out concluding provisions which read as follows: “For purposes of sections 86, 135, 137, 219, and 469, adjusted gross income shall be determined without regard to the deduction allowed under this section.”
(i) without regard to this section and sections 85(c) [OLRC note: So in original. Probably should be followed by a comma.] 911, 931, and 933, and
Amended 1998, 2001, 2004, 2017, 2020, 2021
- 2021 Pub. L. 117-2 Pub. L. 117–2 inserted “85(c)” before “911”.
- 2020 Pub. L. 116-260 Pub. L. 116–260 struck out “222,” after “and sections”.
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 13305(b)(1), struck out “199,” after “and sections”.
- 2004 Pub. L. 108-357 Pub. L. 108–357 inserted “199,” before “222”.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 431(c)(2), inserted “222,” before “911”.
- 1998 Pub. L. 105-277 Pub. L. 105–277, § 4003(a)(2)(A)(i), struck out “135, 137,” after “sections”.
(ii) after application of sections 86, 135, 137, 219, and 469.
Amended 1998
- 1998 Pub. L. 105-277 Pub. L. 105–277, § 4003(a)(2)(A)(ii), inserted “135, 137,” after “sections 86,”.
(c) Dependents not eligible for deduction No 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) Definitions For purposes of this section—
Amended 1998, 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 412(a)(1), redesignated subsec. (e) as (d), and struck out heading and text of former subsec. (d). Text read as follows: “A deduction shall be allowed under this section only with respect to interest paid on any qualified education loan during the first 60 months (whether or not consecutive) in which interest payments are required. For purposes of this paragraph, any loan and all refinancings of such loan shall be treated as 1 loan. Such 60 months shall be determined in the manner prescribed by the Secretary in the case of multiple loans which are refinanced by, or serviced as, a single loan and in the case of loans incurred before the date of the enactment of this section.”
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6004(b)(2), inserted at end “Such 60 months shall be determined in the manner prescribed by the Secretary in the case of multiple loans which are refinanced by, or serviced as, a single loan and in the case of loans incurred before the date of the enactment of this section.”
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(1) Qualified education loan The 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).
(2) Qualified higher education expenses The term “qualified higher education expenses” means the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, 20 U.S.C. 1087ll, as in effect on the day before the date of the enactment of the Taxpayer Relief Act of 1997) at an eligible educational institution, reduced by the sum of—
Amended 2005
- 2005 Pub. L. 109-135 Pub. L. 109–135 substituted “the Taxpayer Relief Act of 1997” for “this Act”.
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(A) the amount excluded from gross income under section 127, 135, 529, or 530 by reason of such expenses, and
(B) the amount of any scholarship, allowance, or payment described in section 25A(g)(2).
For purposes of the preceding sentence, the term “eligible educational institution” has the same meaning given such term by section 25A(f)(2), except that such term shall also include an institution conducting an internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility which offers postgraduate training.
(3) Eligible student The term “eligible student” has the meaning given such term by section 25A(b)(3).
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(4) Dependent The term “dependent” has the meaning given such term by section 152 (determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof).
Amended 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 207(20), inserted “(determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof)” after “section 152”.
(e) Special rules
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 412(a)(1), redesignated subsec. (f) as (e). Former subsec. (e) redesignated (d).
(1) Denial of double benefit No deduction shall be allowed under this section for any amount for which a deduction is allowable under any other provision of this chapter, or for which an exclusion is allowable under section 127 to the taxpayer by reason of the payment by the taxpayer’s employer of any indebtedness on a qualified education loan of the taxpayer. The deduction otherwise allowable under subsection (a) (prior to the application of subsection (b)) to the taxpayer for any taxable year shall be reduced (but not below zero) by so much of the distributions treated as a qualified higher education expense under section 529(c)(9) with respect to loans of the taxpayer as would be includible in gross income under section 529(c)(3)(A) for such taxable year but for such treatment.
Amended 1998, 2019, 2020
- 2020 Pub. L. 116-136 Pub. L. 116–136 inserted “, or for which an exclusion is allowable under section 127 to the taxpayer by reason of the payment by the taxpayer’s employer of any indebtedness on a qualified education loan of the taxpayer” after “provision of this chapter”.
- 2019 Pub. L. 116-94 Pub. L. 116–94 inserted at end: “The deduction otherwise allowable under subsection (a) (prior to the application of subsection (b)) to the taxpayer for any taxable year shall be reduced (but not below zero) by so much of the distributions treated as a qualified higher education expense under section 529(c)(9) with respect to loans of the taxpayer as would be includible in gross income under section 529(c)(3)(A) for such taxable year but for such treatment.”
- 1998 Pub. L. 105-277 Pub. L. 105–277, § 4003(a)(3), inserted before period at end “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)”.
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6004(b)(1), inserted “by the taxpayer solely” after “incurred” in introductory provisions.
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(2) Married couples must file joint return If the taxpayer is married at the close of the taxable year, the deduction shall be allowed under subsection (a) only if the taxpayer and the taxpayer’s spouse file a joint return for the taxable year.
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 402(b)(2)(B), inserted “529,” after “135,”.
(3) Marital status Marital status shall be determined in accordance with section 7703.
(f) Inflation adjustments
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 412(a)(1), redesignated subsec. (g) as (f). Former subsec. (f) redesignated (e).
(1) In general In the case of a taxable year beginning after 2002, the $50,000 and $100,000 amounts in subsection (b)(2) shall each be increased by an amount equal to—
Amended 2001, 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 408(b)(5), amended directory language of Pub. L. 107–16, § 412(b)(2). See 2001 Amendment note below.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 412(b)(2), as amended by Pub. L. 108–311, § 408(b)(5), substituted “$50,000 and $100,000 amounts” for “$40,000 and $60,000 amounts”.
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(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2001” for “calendar year 2016” in subparagraph (A)(ii) thereof.
Amended 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 11002(d)(1)(U), substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”.
(2) Rounding If any amount as adjusted under paragraph (1) is not a multiple of $5,000, such amount shall be rounded to the next lowest multiple of $5,000.