Opens in a new window
Key insights:
Personal loans are helpful financial tools, but they typically aren't tax-deductible. There are very rare exceptions when personal loan interest may be eligible for a deduction when you use the funds for specific eligible expenses. Below, we’ll take a look at those exceptions and how a personal loan can offer financial benefits in other ways.
Before claiming a personal loan tax deduction, it’s best to check with a tax professional first.
No, typically, personal loan interest isn’t tax-deductible. While you may be able to deduct interest on loans tied to a specific deductible purpose, such as a mortgage or student loan, the IRS classifies personal loans as consumer debt, similar to credit card debt.
In a handful of specific situations, interest on the personal loan funds used for eligible expenses may qualify for a tax deduction. A tax professional can help you determine whether you’re eligible.
It’s important to note that many lenders, including Citi, don’t allow you to use personal loans for business or education purposes. Be sure to talk to your lender to make sure you understand the limitations on how you can use your loan funds before you commit to it.
Even though the interest on a personal loan usually isn't tax-deductible, that doesn't diminish the flexibility these loans offer. You can use a personal loan for almost anything, from consolidating debt to covering a home repair or a major life event.
Citi personal loans come with flexibility and no prepayment penalties. You could also get your funds the same business day when deposited directly into an existing Citibank account, giving you quick access to money when you need it most.
Ready to see what a flexible loan option looks like? Explore Citi® Personal Loans today.
In most cases, no. You don’t owe income taxes on personal loan proceeds since you're required to repay them.
Personal loan interest may be tax-deductible when the loan is tied to a specific qualifying use, such as student loans, or business expenses.
This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
