What are the tax benefits of student loan repayment?

In New Mexico, student loan repayment can come with some tax benefits. Under certain circumstances, student loan interest paid can be claimed as an itemized deduction on a taxpayer’s individual income tax return. This deduction is limited to up to $2500 of interest paid and can be claimed by the taxpayer, their spouse, or a dependent. Additionally, those paying student loans may qualify for the Student Loan Interest Deduction (SLID). The SLID is a deduction of up to $2,500 of student loan interest paid. This applies to any student loan interest paid, but must be taken instead of the itemized deduction. For those paying back a student loan from an employer, the employer can provide certain tax benefits to their employees. The employer may be able to deduct any interest paid on the loan from their taxable income, and in some cases, the employee may not be required to pay any income tax on the loan itself. Finally, the Interest Payments and Loan Assistance Programs (IPLAP) may give a tax break on student loan payments. The program allows borrowers to pay the interest on their student loans with money from a special fund. In exchange for making the payments with the fund, the borrower does not have to pay taxes on any of the interest payments made. In summary, those repaying student loans in New Mexico may be eligible for several tax benefits including the Student Loan Interest Deduction, the itemized deduction of up to $2500 of interest, the employer loan option to reduce taxable income, and the Interest Payments and Loan Assistance Program.

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What are the tax benefits of student loan repayment?

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