Nearly 12 Million Americans Claim the Student Loan Interest Deduction

Nearly 12 Million Americans Claim the Student Loan Interest Deduction

Next week, House Republicans are planning to vote on a tax bill to slash taxes dramatically for corporations and the wealthiest Americans. But while the wealthy would see huge benefits, many families would actually face higher taxes. By 2027, millions of middle-class families would pay more, but the average taxpayer in the richest 0.1 percent would receive a tax cut of nearly $280,000 in the same year. The bill cuts higher education tax provisions under the guise of “simplification,” eliminating $65 billion in benefits, including the deduction for student loan interest. In 2014, almost 11.7 million Americans took this deduction, deducting an average of $1,068 from their tax bill.

The student loan interest deduction is an above-the-line deduction, meaning it can be used even by filers claiming the standard deduction for up to $2,500. In 2018, the deduction will be available under current law for single taxpayers making less than $80,000 and for joint filers making less than $165,000, with those making under $65,000 and $135,000, respectively, able to deduct the full credit.

The elimination of the student loan interest deduction is just one part of the House majority’s tax bill that would harm those pursuing higher education. These cuts would make it harder for students to afford higher education and could strain family finances in the years after graduation. These tax provisions should not be eliminated in order to help fund corporate tax cuts.

As the Center for American Progress’ analyses show, millions of lower- and middle-income families across the United States used this deduction in tax year 2014, the most recent year for which data by congressional district is available from the IRS Taxpayer Advocate Service.

Andrew Schwartz is a policy analyst on the Economic Policy team at the Center for American Progress. Alex Rowell is a research associate on the Economic Policy team with the Center.

Source: https://www.americanprogress.org/issues/economy/news/2017/11/09/442614/nearly-12-million-americans-claim-student-loan-interest-deduction/