Married Filing Separate Tax Calculator for Student Loan Borrowers

This calculator estimates how much extra taxes you'll pay when married filing separate for the purposes of minimizing your IDR payment under SAVE, PAYE, or IBR. The downloadable version of this calculator allows you to compare the lower IDR payment with the tax cost.

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You can use the “components of married filing separate” drop down to see what line items impact the added cost the most.

If you want to discuss whether you should file joint or separate for your student loans, get a student loan consult from our expert team. You can also get the full version of this calculator by inputting your email at the bottom of this page.

How filing taxes separately can save money on student loans

Payments under an income-driven repayment (IDR) plan are determined based on a percentage of your discretionary income. For example, the new SAVE plan calculates payments based on 5% to 10% of your income, depending on whether you have undergrad or graduate loans.

Therefore, lower income translates to lower student loan payments, and vice versa.

When calculating your payment as a married borrower, your loan servicer will use your combined household income. But if you file your income taxes separately and enroll in SAVE, PAYE or IBR, your monthly payment will be based on your income — not your spouse’s.

That said, there are some caveats on how income is reported depending on where you live.

Residents of community property states (e.g., AZ, CA, ID, LA, NM, NV, TX, WA, WI) must split household income evenly when filing taxes separately. This creates a minimal cost difference between filing separately versus jointly. However, if you live in a non-community property state, filing separately could push the higher-earning spouse into a higher tax bracket, resulting in an additional tax liability. If this is the case, you’ll need to indicate that your income has declined during the recertification process and submit alternative income documentation.

Additionally, filing taxes separately can come with negative side effects, which may or may not outweigh the benefits of the MFS strategy for student loans.

Potential drawbacks of filing taxes separately

Although filing taxes separately can help lower your student loan payments, it can have some unintended consequences. For example, you might not be able to claim certain deductions and tax credits when married filing separately, which could cost you more come tax season.

But borrowers who depend on subsidized healthcare coverage through the Health Insurance Marketplace could be making a huge mistake by filing separately in hopes of lowering student loan payments.

Before moving forward with filing taxes separately, you should consider the following:

1. Married filing separately can disqualify you from receiving the advanced premium tax credit (APTC). If you don’t have access to an employer-sponsored healthcare plan and need coverage through the Marketplace, you could lose thousands of dollars of ACA tax credit and subsidy savings by filing separately.
2. Not all tax credits and deductions are available to married filing separately. For example, you won't be eligible for the child dependent care tax credit (CDCTC), education tax credits or the student loan interest deduction. 
3. You won’t be able to make direct Roth IRA contributions. This is one of the most common issues borrowers run into when using the MFS strategy to lower student loan payments. If you lived with your spouse at any time during the tax year and file taxes separately, you can’t contribute to a Roth IRA if your modified adjusted gross income is greater than $10,000. But you can still technically do it by using the backdoor Roth IRA strategy as a work-around.

Married student loan borrowers must find a balance between their student loan payments, income taxes and healthcare subsidies to maximize overall savings.

Should I file taxes separately or jointly?

When deciding whether to file taxes separately versus jointly, you’ll need to take a holistic approach to your finances. Important factors and considerations include:

• Do you need subsidized healthcare coverage or are you covered by an employer-sponsored plan?
• Will one spouse be pushed into a higher tax bracket due to making significantly more income?
• Do both spouses have student loan debt?
• Who will claim your children as dependents?
• Do you live in a community property state?
• What is the overall impact on your tax bill?

Married filing separately might lower your student loan payments, but it can also increase your taxes — particularly if you live in a non-community property state or lose access to valuable tax credits. This student loan strategy won’t make sense for all married borrowers, but for some, it can save thousands of dollars annually on IDR payments and maximize loan forgiveness.

Our calculator can help estimate the cost difference when filing separately versus jointly. However, it’s best to work with an experienced tax professional who also has student loan expertise to ensure you come out on top for your student debt payments, tax bill and other important considerations.