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The bill simplifies and strengthens rules around the student loan interest deduction by capping it at $2,500 and banning duplicate claims, which improves tax clarity and integrity but raises taxes for some borrowers and creates short-term administrative costs.
Taxpayers who pay student loan interest (especially middle-class families) will have a clear, predictable cap of $2,500 per year on the student loan interest deduction, making tax planning simpler.
Taxpayers will be explicitly prohibited from claiming the same student loan interest deduction under multiple Code provisions, reducing improper or duplicative deductions and improving tax administration.
Taxpayers who currently deduct more than $2,500 in student loan interest (including many middle-class families and students with high interest payments) will face higher taxable income and larger tax bills after 2026.
Borrowers with large loan balances or high-interest payments (often young adults and students) will see a reduced after-tax benefit from paying student loan interest, effectively increasing the net cost of their loans.
Taxpayers and financial institutions may face short-term confusion and administrative costs because the Treasury/IRS must update guidance and tax forms to reflect the new cap and the denial-of-double-benefit rule.
Caps the student loan interest deduction at $2,500 per individual borrower and clarifies that the deduction cannot be taken for amounts already deductible elsewhere in the tax code. The change applies to taxable years beginning after December 31, 2026, and is intended to allow each individual who incurred student loan debt to claim up to $2,500 rather than limiting the deduction per joint return.
Introduced March 17, 2026 by Raphael Gamaliel Warnock · Last progress March 17, 2026