Why didn't I get the full capped amount for my Student Loan Interest (1098-E)

[beh162]

I get the following message when I added my 1098-E "You might be wondering why it isn't $10,150. That's because there's a cap of $2,500 for this deduction"  But my federal refund only increased by around $500

[NewGuy · Accepted solution]

The $2,500 is a deduction, not a credit.  A deduction lowers your taxable income which lowers your overall tax obligation based on what tax bracket you fall.