H.R. 7536 — GRADUATE Act

This section revises the student loan interest deduction under IRC §221—currently an above-the-line deduction of up to $2,500 for interest paid on qualified education loans—to instead allow a deduction for all amounts paid on such loans, up to $10,000 plus $500 per taxpayer dependent. It increases the modified adjusted gross income phaseout thresholds to $125,000 single/$250,000 joint (from $50,000/$100,000), updates the inflation adjustment base year to calendar year 2025 (from 2001), and applies inflation adjustments to taxable years after 2026 (from after 2002). The changes apply to taxable years beginning after December 31, 2025, with a conforming amendment to the list of above-the-line deductions in IRC §62(a).