Provides modifications for payments of interest on student loans shall be subtracted from federal adjusted gross income to an amount equal to the payments of interest for the satisfaction of outstanding student loans.

Rhode Island Student Loan Interest Tax Deduction Bill

This bill would give Rhode Island residents a state income tax break on the interest they pay on their student loans. Specifically, it would allow people to subtract the full amount of student loan interest payments from their income before calculating how much state income tax they owe. This means that if you paid, say, $1,000 in student loan interest during the year, you could reduce your taxable income by that $1,000 amount on your Rhode Island state tax return.

The bill would primarily affect Rhode Islanders who are currently repaying student loans — whether from college, graduate school, or other educational programs. Under current federal tax law, there is already a deduction for student loan interest, but it comes with income limits and caps that reduce or eliminate the benefit for many borrowers. This state-level bill appears to offer a potentially broader or separate deduction specifically on the Rhode Island portion of your taxes, regardless of those federal restrictions.

In practical terms, this bill could mean lower state tax bills for student loan borrowers in Rhode Island. The more interest someone pays on their student loans in a given year, the greater the potential tax savings. The bill has been introduced and sent to the House Finance Committee, where it will be reviewed before any further action is taken.