26 USC 221 - Interest on education loans

U.S Code last checked for updates: Nov 22, 2024

§ 221.

Interest on education loans

(a)

Allowance of deduction

(b)

Maximum deduction

(1)

In general

(2)

Limitation based on modified adjusted gross income

(A)

In general

(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)

without regard to this section and sections 85(c) 1

 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 deduction

(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

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—

(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

(4)

Dependent

(e)

Special rules

(1)

Denial of double benefit

(2)

Married couples must file joint return

(3)

Marital status

(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

(Added Pub. L. 105–34, title II, § 202(a), Aug. 5, 1997, 111 Stat. 806; amended Pub. L. 105–206, title VI, § 6004(b), July 22, 1998, 112 Stat. 792; Pub. L. 105–277, div. J, title IV, § 4003(a)(2)(A), (3), Oct. 21, 1998, 112 Stat. 2681–908; Pub. L. 107–16, title IV, §§ 402(b)(2)(B), 412(a)(1), (b)(1), (2), 431(c)(2), June 7, 2001, 115 Stat. 62–64, 68; Pub. L. 108–311, title II, § 207(20), title IV, § 408(b)(5), Oct. 4, 2004, 118 Stat. 1178, 1192; Pub. L. 108–357, title I, § 102(d)(2), Oct. 22, 2004, 118 Stat. 1428; Pub. L. 109–135, title IV, § 412(t), Dec. 21, 2005, 119 Stat. 2638; Pub. L. 113–295, div. A, title II, § 221(a)(40), Dec. 19, 2014, 128 Stat. 4043; Pub. L. 115–97, title I, §§ 11002(d)(1)(U), 13305(b)(1), Dec. 22, 2017, 131 Stat. 2060, 2126; Pub. L. 116–94, div. O, title III, § 302(b)(2), Dec. 20, 2019, 133 Stat. 3176; Pub. L. 116–136, div. A, title II, § 2206(b), Mar. 27, 2020, 134 Stat. 347; Pub. L. 116–260, div. EE, title I, § 104(b)(2)(G), Dec. 27, 2020, 134 Stat. 3041; Pub. L. 117–2, title IX, § 9042(b)(6), Mar. 11, 2021, 135 Stat. 122.)

cite as: 26 USC 221