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Bill

S 1821

Establishes a personal income tax deduction for the interest paid on student loans by certain taxpayers

2025 Regular Session Introduced by Nathalia Fernández

S 1821 - Student Loan Interest Deduction Act OverviewBill Number: S 1821 Title: Establishes a personal income tax deduction for the interest paid on student loans by certain taxpa

REFERRED TO BUDGET AND REVENUE
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Bill Summary · S 1821

S 1821 - Student Loan Interest Deduction Act

Overview

Bill Number: S 1821
Title: Establishes a personal income tax deduction for the interest paid on student loans by certain taxpayers
Status: REFERRED TO BUDGET AND REVENUE
Introduced: May 20, 2025

Purpose and Intent

The primary goal of this bill is to provide tax relief for individuals who are repaying student loans by allowing them to deduct the interest paid on those loans from their taxable income. The rationale is to ease the financial burden on borrowers and encourage higher education by making student loans more affordable.

Key Provisions

  • Allows taxpayers to deduct up to $2,500 in student loan interest paid per year from their taxable income
  • Eligibility is limited to individuals with a modified adjusted gross income (MAGI) of less than $80,000 (or $160,000 for married couples filing jointly)
  • The deduction phases out for individuals with a MAGI between $65,000 and $80,000 (or $130,000 and $160,000 for joint filers)
  • Applies to interest paid on qualified education loans used for tuition, fees, room and board, and other approved expenses
  • Deduction can be claimed regardless of whether the taxpayer itemizes deductions or claims the standard deduction

Affected Parties and Impacts

This bill would directly benefit individual taxpayers who are repaying student loans and meet the income eligibility requirements. It is intended to provide financial relief and make higher education more affordable by reducing the tax burden on student loan interest payments.

The potential impacts include:
- Increased disposable income for eligible borrowers, which could boost consumer spending and economic activity
- Incentivizing higher education by making student loans more manageable for middle-income families
- Potential reductions in student loan defaults and delinquencies as the interest deduction eases the financial strain

Procedural and Timeline Considerations

The bill was introduced in the Senate on May 20, 2025 and has been referred to the Senate Committee on Budget and Revenue for consideration. If passed by the committee, it would then proceed to a full Senate vote. If approved by the Senate, it would then move to the House of Representatives for further review and voting.

The proposed effective date of the student loan interest deduction is for tax years beginning after December 31, 2025, so it would first apply to individual income tax returns filed in 2026 for the 2025 tax year.

Compiled from official sources — confirm details with the bill’s official record.

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