26 U.S.C. § 221 | Interest on education loans

(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.

(b)

Maximum deduction

(1)

In general

Except 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 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—

(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 income

The term “modified adjusted gross income” means adjusted gross income determined—

(i)

1 So in original. Probably should be followed by a comma.

without regard to this section and sections 85(c)  911, 931, and 933, and

(ii)

after application of sections 86, 135, 137, 219, and 469.

(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—

(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

20 U.S.C. 1087llThe term “qualified higher education expenses” means the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, , 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—

(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).

(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).

(e)

Special rules

(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.

(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.

(3)

Marital status

Marital status shall be determined in accordance with section 7703.

(f)

Inflation adjustments

(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—

(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.

(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.

Pub. L. 105–34, title II, § 202(a)Aug. 5, 1997111 Stat. 806 Pub. L. 105–206, title VI, § 6004(b)July 22, 1998112 Stat. 792 Pub. L. 105–277, div. J, title IV, § 4003(a)(2)(A)Oct. 21, 1998112 Stat. 2681–908 Pub. L. 107–16, title IVJune 7, 2001115 Stat. 62–64 Pub. L. 108–311, title II, § 207(20)Oct. 4, 2004118 Stat. 1178 Pub. L. 108–357, title I, § 102(d)(2)Oct. 22, 2004118 Stat. 1428 Pub. L. 109–135, title IV, § 412(t)Dec. 21, 2005119 Stat. 2638 Pub. L. 113–295, div. A, title II, § 221(a)(40)Dec. 19, 2014128 Stat. 4043 Pub. L. 115–97, title IDec. 22, 2017131 Stat. 2060 Pub. L. 116–94, div. O, title III, § 302(b)(2)Dec. 20, 2019133 Stat. 3176 Pub. L. 116–136, div. A, title II, § 2206(b)Mar. 27, 2020134 Stat. 347 Pub. L. 116–260, div. EE, title I, § 104(b)(2)(G)Dec. 27, 2020134 Stat. 3041 Pub. L. 117–2, title IX, § 9042(b)(6)Mar. 11, 2021135 Stat. 122(Added , , ; amended , , ; , (3), , ; , §§ 402(b)(2)(B), 412(a)(1), (b)(1), (2), 431(c)(2), , , 68; , title IV, § 408(b)(5), , , 1192; , , ; , , ; , , ; , §§ 11002(d)(1)(U), 13305(b)(1), , , 2126; , , ; , , ; , , ; , , .)

Inflation Adjusted Items for Certain Years

section 1 of this titleFor inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under .

Editorial Notes

References in Text

Pub. L. 105–34Aug. 5, 1997The date of the enactment of the Taxpayer Relief Act of 1997, referred to in subsec. (d)(2), is the date of enactment of , which was approved .

Prior Provisions

section 226 of this titleA prior section 221 was renumbered .

Pub. L. 97–34, title I, § 103(a)Aug. 13, 198195 Stat. 187 Pub. L. 97–448, title III, § 305(d)(4)Jan. 12, 198396 Stat. 2400 Pub. L. 99–514, title I, § 131(a)Oct. 22, 1986100 Stat. 2113Dec. 31, 1986Another prior section 221, added , , ; amended , , , related to deduction for two-earner married couples, prior to repeal by , , , applicable to taxable years beginning after .

Amendments

Pub. L. 117–22021—Subsec. (b)(2)(C)(i). inserted “85(c)” before “911”.

Pub. L. 116–2602020—Subsec. (b)(2)(C)(i). struck out “222,” after “and sections”.

Pub. L. 116–136Subsec. (e)(1). 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”.

Pub. L. 116–942019—Subsec. (e)(1). 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.”

Pub. L. 115–97, § 13305(b)(1)2017—Subsec. (b)(2)(C)(i). , struck out “199,” after “and sections”.

Pub. L. 115–97, § 11002(d)(1)(U)Subsec. (f)(1)(B). , substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”.

Pub. L. 113–2952014—Subsec. (b)(1). 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.

Pub. L. 109–1352005—Subsec. (d)(2). substituted “the Taxpayer Relief Act of 1997” for “this Act”.

Pub. L. 108–3572004—Subsec. (b)(2)(C)(i). inserted “199,” before “222”.

Pub. L. 108–311, § 207(20)Subsec. (d)(4). , inserted “(determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof)” after “section 152”.

Pub. L. 108–311, § 408(b)(5)Pub. L. 107–16, § 412(b)(2)Subsec. (f)(1). , amended directory language of . See 2001 Amendment note below.

Pub. L. 107–16, § 412(b)(1)2001—Subsec. (b)(2)(B)(i), (ii). , amended cls. (i) and (ii) generally. Prior to amendment, cls. (i) and (ii) read as follows:

“(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

“(ii) $15,000.”

Pub. L. 107–16, § 431(c)(2)Subsec. (b)(2)(C)(i). , inserted “222,” before “911”.

Pub. L. 107–16, § 412(a)(1)Subsec. (d). , 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.”

Pub. L. 107–16, § 412(a)(1)Subsec. (e). , redesignated subsec. (f) as (e). Former subsec. (e) redesignated (d).

Pub. L. 107–16, § 402(b)(2)(B)Subsec. (e)(2)(A). , inserted “529,” after “135,”.

Pub. L. 107–16, § 412(a)(1)Subsec. (f). , redesignated subsec. (g) as (f). Former subsec. (f) redesignated (e).

Pub. L. 107–16, § 412(b)(2)Pub. L. 108–311, § 408(b)(5)Subsec. (f)(1). , as amended by , substituted “$50,000 and $100,000 amounts” for “$40,000 and $60,000 amounts”.

Pub. L. 107–16, § 412(a)(1)Subsec. (g). , redesignated subsec. (g) as (f).

Pub. L. 105–277, § 4003(a)(2)(A)(iii)1998—Subsec. (b)(2)(C). , 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.”

Pub. L. 105–277, § 4003(a)(2)(A)(i)Subsec. (b)(2)(C)(i). , struck out “135, 137,” after “sections”.

Pub. L. 105–277, § 4003(a)(2)(A)(ii)Subsec. (b)(2)(C)(ii). , inserted “135, 137,” after “sections 86,”.

Pub. L. 105–206, § 6004(b)(2)Subsec. (d). , 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.”

Pub. L. 105–277, § 4003(a)(3)Subsec. (e)(1). , 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)”.

Pub. L. 105–206, § 6004(b)(1), inserted “by the taxpayer solely” after “incurred” in introductory provisions.

Statutory Notes and Related Subsidiaries

Effective Date of 2021 Amendment

Pub. L. 117–2Dec. 31, 2019section 9042(c) of Pub. L. 117–2 section 74 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 2020 Amendment

Pub. L. 116–260Dec. 31, 2020section 104(c) of div. EE of Pub. L. 116–260 section 25A of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Pub. L. 116–136Mar. 27, 2020section 2206(c) of Pub. L. 116–136 section 127 of this titleAmendment by applicable to payments made after , see , set out as a note under .

Effective Date of 2019 Amendment

Pub. L. 116–94, div. O, title III, § 302(c)Dec. 20, 2019133 Stat. 3176

section 529 of this titleDecember 31, 2018“The amendments made by this section [amending this section and ] shall apply to distributions made after .”

, , , provided that:

Effective Date of 2017 Amendment

section 11002(d)(1)(U) of Pub. L. 115–97Dec. 31, 2017section 11002(e) of Pub. L. 115–97 section 1 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

section 13305(b)(1) of Pub. L. 115–97Dec. 31, 2017section 13305(c) of Pub. L. 115–97 section 74 of this titleAmendment by applicable to taxable years beginning after , except as provided by transition rule, see , set out as a note under .

Effective Date of 2014 Amendment

Pub. L. 113–295Dec. 19, 2014section 221(b) of Pub. L. 113–295 section 1 of this titleAmendment by effective , subject to a savings provision, see , set out as a note under .

Effective Date of 2004 Amendments

Pub. L. 108–357Dec. 31, 2004section 102(e) of Pub. L. 108–357 section 56 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

section 207(20) of Pub. L. 108–311Dec. 31, 2004section 208 of Pub. L. 108–311 section 2 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 2001 Amendment

section 402(b)(2)(B) of Pub. L. 107–16Dec. 31, 2001section 402(h) of Pub. L. 107–16 section 72 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Pub. L. 107–16, title IV, § 412(a)(3)June 7, 2001115 Stat. 64

section 6050S of this titleDecember 31, 2001“The amendments made by this subsection [amending this section and ] shall apply with respect to any loan interest paid after , in taxable years ending after such date.”

, , , provided that:

Pub. L. 107–16, title IV, § 412(b)(3)June 7, 2001115 Stat. 64

December 31, 2001“The amendments made by this subsection [amending this section] shall apply to taxable years ending after .”

, , , provided that:

section 431(c)(2) of Pub. L. 107–16Dec. 31, 2001section 431(d) of Pub. L. 107–16 section 62 of this titleAmendment by applicable to payments made in taxable years beginning after , see , set out as a note under .

Effective Date of 1998 Amendments

Pub. L. 105–277 Pub. L. 105–34lPub. L. 105–277 section 86 of this titleAmendment by effective as if included in the provision of the Taxpayer Relief Act of 1997, , to which such amendment relates, see section 4003() of , set out as a note under .

Pub. L. 105–206 Pub. L. 105–34 section 6024 of Pub. L. 105–206 section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, , to which such amendment relates, see , set out as a note under .

Effective Date

Aug. 5, 1997Dec. 31, 1997Dec. 31, 1997section 202(e) of Pub. L. 105–34 section 62 of this titleSection applicable to any qualified education loan (as defined in subsec. (e)(1) of this section) incurred on, before, or after , but only with respect to any loan interest payment due and paid after , and to the portion of the 60-month period referred to in subsec. (d) of this section after , see , set out as an Effective Date of 1997 Amendment note under .