Sponsors (4)
The bill preserves a modest, capped student loan interest deduction and prevents duplicate tax benefits to simplify administration, but it reduces tax relief and planning flexibility for some borrowers and adds new compliance burdens.
Borrowers/taxpayers with student loan interest will continue to receive a predictable, capped federal tax deduction of up to $2,500 per year for student loan interest, maintaining some ongoing tax relief for many borrowers.
Tax administration will be simpler for the IRS and reduce opportunities for duplicate tax benefits by denying a §221 deduction for amounts already deductible elsewhere, which can lower abuse and enforcement costs.
Taxpayers (especially those who currently deduct more than $2,500 or who rely on combining multiple deductions) will lose some tax relief and planning flexibility because the bill caps the student loan interest benefit and forbids stacking a §221 deduction with other allowed deductions.
Taxpayers and preparers will face a new rule to track for post-2026 returns, increasing compliance complexity and potentially raising preparer costs.
Based on analysis of 4 sections of legislative text.
Sets the student loan interest deduction cap at $2,500 "with respect to a taxpayer" and disallows claiming the same amount under other Code provisions.
Introduced March 17, 2026 by Raphael Gamaliel Warnock · Last progress March 17, 2026
Amends the tax code to set a $2,500 cap on student loan interest that can be taken into account "with respect to a taxpayer" for indebtedness incurred by an individual, and clarifies that any amount deductible under another provision of the Internal Revenue Code cannot also be deducted under the student loan interest deduction. The change applies to taxable years beginning after December 31, 2026.