12. Tax Breaks for Students Survive
The effort by the House of Representatives to eliminate the deduction for interest paid on student loans and to begin taxing tuition benefits earned by graduate students were snubbed by the Senate. Neither proposal made it into the new law.
As under the old law, you can continue deduct up to $2,500 a year of interest paid on student loans. This write-off can be claimed by those who take the standard deduction, but it phases out at higher income levels. Also, tuition waivers and discounts received by graduate students will retain their tax-free status.
The new law also declares that, if a student loan is discharged due to the borrower’s death or permanent disability, the amount discharged will no longer be considered taxable income.
