A tax bill proposal being pushed by U.S. House Republicans would eliminate the tax deduction for student loan interest payments.
Under current tax law, eligible taxpayers can claim up to $2,500 of their student loan interest payments as a tax deduction, so long as their modified gross income is less than $80,000 ($160,000 for married couples filing jointly).
However, University of South Carolina tax policy expert Donna Bobek Schmitt told South Carolina Radio Network that there would be little negative impact “because of the other features of the tax system.” The House plan would also double the standard deduction that any taxpayer could seek up to $12,000 ($24,000 for married couples filing jointly).
She said she crunched different incomes levels in various situations to reach her conclusion. “I ran some numbers using a bunch of different scenarios and due to other features of the proposal I can’t see anyone is going to be worse off,” Schmitt said.
Only the House proposal has the student loan interest deduction eliminated, the Senate version keeps the deduction.
More than 12 million borrowers deducted student loan interest on their Form 1040 in 2015 according to the IRS. More than 44 million Americans have student loan debt.