GRADUATE Act

Section 221 of the Internal Revenue Code of 1986 is amended—

(1) in the heading, by striking Interest on education loans and inserting Education loans,

(2) by amending subsection (a) to read as follows:

In the case of an individual, there shall be allowed as a deduction for the taxable year an amount equal to the amounts paid by the taxpayer during the taxable year on any qualified education loan.

(3) by amending subsection (b) to read as follows:

Except as provided in paragraph (2), the deduction allowed by subsection (a) for the taxable year shall not exceed an amount equal to the sum of—

(A) $10,000, plus

(B) $500 multiplied by the number of dependents of the taxpayer for such taxable year.

The amount which would (but for this paragraph) be allowable as a deduction under this section shall be reduced (but not below zero) by the amount determined under subparagraph (B).

The amount determined under this subparagraph is the amount which bears the same ratio to the amount which would be so taken into account as—

(i) the excess of—

(I) the taxpayer’s modified adjusted gross income for such taxable year, over

(II) $125,000 ($250,000 in the case of a joint return), bears to

(ii) $25,000 ($50,000 in the case of a joint return).

The term modified adjusted gross income means adjusted gross income determined—

(i) without regard to this section and sections 85(c), 911, 931, and 933, and

(ii) after application of sections 86, 135, 137, 219, and 469.

(3) , and

(4) in subsection (f)(1)—

(A) by striking after 2002 and inserting after 2026,

(B) by striking $50,000 and $100,000 and inserting $125,000 and $250,000, and

(C) in subparagraph (B), by striking calendar year 2001 and inserting calendar year 2025.

Section 62(a)(17) of such Code is amended to read as follows:

The deduction allowed by section 221.

The amendment made by this section shall apply to taxable years beginning after December 31, 2025.