Can H‑1B Visa Holders Claim Student Loan Interest Deduction After One Big Beautiful Bill Act?

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Key Takeaways

• The One Big Beautiful Bill Act permanently excludes employer-paid student loans from taxable income.
• H-1B holders who are resident aliens can claim up to $2,500 deduction on student loan interest.
• Non-resident alien H-1B holders generally cannot claim the student loan interest deduction.

The One Big Beautiful Bill Act, Student Loan Interest Deduction, and H-1B Holders: What You Need to Know

Immigration and tax policies often intersect in ways that can affect the lives of many people living and working in the United States 🇺🇸. One area where this is especially true is The student loan interest deduction—a tax benefit that helps people who are paying off student loans. With the recent passage of the One Big Beautiful Bill Act by the Senate GOP, many H-1B holders are asking whether they can still claim this deduction. This article explains what the One Big Beautiful Bill Act is, how the student loan interest deduction works, who qualifies, and what H-1B holders need to know about their rights and options.

Can H‑1B Visa Holders Claim Student Loan Interest Deduction After One Big Beautiful Bill Act?

Understanding the One Big Beautiful Bill Act

The One Big Beautiful Bill Act is a new law passed by the Senate GOP as of July 3, 2025. The act includes several tax-related changes, but it does not directly mention the student loan interest deduction for H-1B holders or any other specific group. One important part of the act is that it makes permanent the tax exclusion for employer-paid student loans. This means if your employer helps pay your student loans, you may not have to pay taxes on that help. However, this is a separate benefit from the student loan interest deduction.

What Is the Student Loan Interest Deduction?

The student loan interest deduction is a tax benefit that lets people deduct up to $2,500 of interest paid on qualified student loans each year. This deduction is an “adjustment to income,” which means you do not have to itemize your deductions to claim it. Instead, you can subtract the amount of interest you paid (up to the limit) from your income before calculating your taxes. This can lower your tax bill and help make student loan payments a little less stressful.

To claim the student loan interest deduction, you must meet certain requirements:

You paid interest on a qualified student loan during the tax year.
Your filing status is not married filing separately.
No one else can claim you as a dependent.
Your modified adjusted gross income (MAGI) is below certain limits.
You are legally required to pay the interest on the loan.

The deduction is limited to $2,500 or the actual amount of interest you paid, whichever is less. If your income is above a certain level, the deduction is reduced or “phased out.” For more details, you can visit the IRS Topic No. 456 Student Loan Interest Deduction.

Who Are H-1B Holders?

H-1B holders are people who have been granted an H-1B visa. This visa allows skilled workers from other countries to work in the United States 🇺🇸 for a specific employer. Many H-1B holders come to the United States 🇺🇸 after studying at American universities, and some have student loans from their time as students. Others may have loans from their home countries or from U.S. lenders.

H-1B holders are considered “non-immigrants,” which means they are allowed to live and work in the United States 🇺🇸 temporarily. However, their tax status can be more complicated. Some H-1B holders are considered “resident aliens” for tax purposes, while others are “non-resident aliens.” This difference is important when it comes to claiming tax deductions like the student loan interest deduction.

Tax Status: Resident Alien vs. Non-Resident Alien

The Internal Revenue Service (IRS) uses two main tests to decide if someone is a resident alien or a non-resident alien for tax purposes:

Green Card Test: If you have a green card, you are a resident alien.
Substantial Presence Test: If you have been physically present in the United States 🇺🇸 for at least 31 days during the current year and 183 days during the last three years (counting all the days this year, one-third of the days last year, and one-sixth of the days the year before), you are a resident alien.

Most H-1B holders who have lived in the United States 🇺🇸 for more than a year will meet the substantial presence test and be considered resident aliens for tax purposes. Resident aliens are taxed like U.S. citizens and can claim most of the same tax deductions, including the student loan interest deduction, if they meet the other requirements.

Non-resident aliens, on the other hand, usually cannot claim the student loan interest deduction. They file their taxes using Form 1040NR, which does not allow for this deduction unless there is a special tax treaty or arrangement.

How the One Big Beautiful Bill Act Affects H-1B Holders

The One Big Beautiful Bill Act does not specifically mention the student loan interest deduction for H-1B holders or any other group. It does, however, make permanent the tax exclusion for employer-paid student loans. This means if your employer helps pay your student loans, you will not have to pay taxes on that help, which can be a big benefit.

But when it comes to the student loan interest deduction, the rules have not changed. H-1B holders who are considered resident aliens for tax purposes can still claim the deduction if they meet the other requirements. Non-resident aliens generally cannot claim the deduction.

Key Points for H-1B Holders

Resident aliens can claim the student loan interest deduction if they meet all the requirements.
Non-resident aliens usually cannot claim the deduction.
The deduction is limited to $2,500 or the actual interest paid, whichever is less.
The deduction is reduced or phased out at higher income levels.
The One Big Beautiful Bill Act does not change these rules.

Eligibility and Requirements for the Student Loan Interest Deduction

To help you understand if you qualify, here is a breakdown of the main requirements:

Type of Loan: The loan must be a “qualified student loan.” This means it was taken out only to pay for qualified education expenses for you, your spouse, or your dependent.
Who Paid the Interest: You must have paid the interest yourself. If someone else paid it, you cannot claim the deduction.
Filing Status: You cannot claim the deduction if your filing status is married filing separately.
Dependency: If someone else can claim you as a dependent, you cannot claim the deduction.
Income Limits: The deduction is phased out if your modified adjusted gross income (MAGI) is above a certain amount. For 2025, these limits may change, so check the latest IRS guidance.
Tax Status: You must be a resident alien for tax purposes to claim the deduction.

How to Claim the Deduction

If you qualify, you can claim the student loan interest deduction on your federal tax return. Here’s how:

Use Form 1040 or 1040-SR: Resident aliens file taxes using these forms. Non-resident aliens use Form 1040NR, which does not allow for the deduction.
Report the Deduction: Enter the amount of student loan interest paid on Schedule 1 (Form 1040), line 21.
Keep Records: You should receive Form 1098-E from your lender if you paid more than $600 in interest. Keep this form for your records.

For more information and to access the latest forms, visit the IRS Forms and Publications.

Comparing the Student Loan Interest Deduction and Employer-Paid Student Loan Exclusion

It’s important to understand the difference between the student loan interest deduction and the employer-paid student loan exclusion:

Student Loan Interest Deduction: Lets you deduct up to $2,500 of interest you paid on your student loans from your taxable income.
Employer-Paid Student Loan Exclusion: Lets you exclude up to $5,250 per year of student loan payments made by your employer from your taxable income. This means you do not pay taxes on this amount.

The One Big Beautiful Bill Act makes the employer-paid student loan exclusion permanent, but it does not change the rules for the student loan interest deduction.

Real-World Example: H-1B Holder Claiming the Deduction

Let’s look at a simple example:

Priya is an H-1B holder who has lived in the United States 🇺🇸 for three years. She took out a student loan to pay for her master’s degree at a U.S. university. In 2025, she paid $2,000 in interest on her student loan. Priya meets the substantial presence test, so she is a resident alien for tax purposes. Her income is below the phaseout limit, and she files her taxes using Form 1040. Priya can claim the full $2,000 as a student loan interest deduction, which will lower her taxable income.

If Priya’s employer also paid $3,000 toward her student loans in 2025, she would not have to pay taxes on that amount, thanks to the employer-paid student loan exclusion made permanent by the One Big Beautiful Bill Act.

Practical Implications for H-1B Holders

For H-1B holders, understanding these rules can make a real difference in how much tax they pay each year. Here are some practical tips:

Check Your Tax Status: Make sure you know if you are a resident alien or non-resident alien for tax purposes. This affects which deductions you can claim.
Keep Good Records: Save all documents related to your student loans, including Form 1098-E and any statements from your lender.
Watch Your Income: If your income is close to the phaseout limit, you may lose some or all of the deduction.
Ask Your Employer: If your employer offers student loan repayment help, ask if it qualifies for the tax exclusion.
Stay Informed: Tax laws can change. Always check the latest IRS guidance or talk to a tax professional.

As reported by VisaVerge.com, many H-1B holders have questions about how new laws like the One Big Beautiful Bill Act affect their taxes. The good news is that, for now, the rules for the student loan interest deduction remain the same for H-1B holders who are resident aliens.

What to Watch for in the Future

The One Big Beautiful Bill Act is still moving through the legislative process, and details may change. It’s important to keep an eye on official government sources for updates. Any changes to tax deductions, including the student loan interest deduction, could affect H-1B holders and other taxpayers.

If you want to stay up to date, you can check the U.S. Senate’s official website for the latest news on the One Big Beautiful Bill Act and other tax laws.

Summary and Next Steps

The One Big Beautiful Bill Act does not change the student loan interest deduction for H-1B holders.
H-1B holders who are resident aliens for tax purposes can still claim the deduction if they meet all requirements.
Non-resident aliens generally cannot claim the deduction.
The act makes the employer-paid student loan exclusion permanent, which is a separate benefit.
Always check your tax status, keep good records, and stay informed about changes in the law.

If you are an H-1B holder with student loans, understanding these rules can help you save money and avoid mistakes on your taxes. For more help, visit the IRS Topic No. 456 Student Loan Interest Deduction or talk to a qualified tax professional.

By staying informed and organized, you can make the most of the benefits available to you and avoid surprises at tax time.

Learn Today

One Big Beautiful Bill Act → A 2025 Senate GOP law making employer-paid student loan repayments tax-exempt permanently.
Student Loan Interest Deduction → A tax benefit allowing deduction up to $2,500 of qualified student loan interest paid annually.
H-1B Holder → A temporary skilled worker visa holder authorized to work in the U.S. for a specific employer.
Resident Alien → An individual meeting IRS criteria to be taxed like a U.S. citizen with full deduction eligibility.
Non-Resident Alien → An individual taxed differently from citizens; usually cannot claim standard deductions, including student loan interest.

This Article in a Nutshell

The One Big Beautiful Bill Act permanently excludes employer-paid student loans from taxes. H-1B holders classified as resident aliens retain eligibility for the student loan interest deduction, up to $2,500 annually. Non-resident aliens cannot claim this deduction. Understanding your tax status is essential for maximizing benefits under current law.
— By VisaVerge.com