Student Loan Credit

Minnesota residents who make payments on their own postsecondary education loans may qualify for a nonrefundable credit. For married couples, each spouse may qualify.

To qualify, both of these must be true:

• You are a full-year or part-year Minnesota resident.
• You make payments on your own qualifying education loans during the tax year. For married couples, each spouse must have made payments on their own qualified loans.

You may not claim payments you made on someone else's loans or payments other individuals made on your loans.

The credit amount depends on your income, loan payments, and original loan amount. The maximum credit is $500 each year or $1,000 for married couples filing a joint return.

To claim the credit, complete Schedule M1SLC, Student Loan Credit, and include it when you file Form M1, Individual Income Tax.

Student Loan Reimbursements From Employer 

If your student loan payments were reimbursed through an employer-sponsored qualified educational assistance program under Internal Revenue Code, section 127, you must reduce the amount of your payments by the reimbursed amount when calculating the credit.

Reimbursements through these programs are not included in your adjusted gross income. If the reimbursements were included in your adjusted gross income, you may include your payments that were reimbursed when calculating the credit. 

If you already claimed this credit when filing your original Minnesota Income Tax Return and then later received reimbursements for the payments used to calculate this credit, you must file Form M1X, Amended Minnesota Income Tax Return, to exclude the reimbursed payments and recalculate your credit.