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Student Loan Interest Deduction
A federal and Massachusetts deduction is allowed for interest paid by the taxpayer, up to an annual maximum of $2,500, for a qualified education loan for graduate or undergraduate education, subject to taxpayer income limitations. Under the January 1, 1998 Code, this deduction was limited to the first 60 months and subject to lower taxpayer income limitations. As a result of Code update, Massachusetts adopts the new federal provision that repealed the 60 month limitation and allows higher taxpayer income limitations, subject to annual inflation adjustments. For tax year 2005, the maximum deduction of $2,500 is reduced for taxpayers when federal modified adjusted gross income exceeds $50,000 ($105,000 for joint returns) and is completely eliminated when federal modified gross adjusted gross income is $65,000 ($135,000 for joint returns).
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