Why is my student loan deduction amount saying $1,043, but the amount actually added to my return only adds up to roughly $200?

[bradylatsha]

It tells me my deduction is $1,043, but this is not what is added to my Federal Refund on the left side

[jerry2000 · Accepted solution]

That is because it is a deduction not a tax credit. A deduction does not reduce your tax dollar for dollar. It reduces your tax by reducing your taxable income. So, the maximum benefit you get from a deduction is the amount of the deduction times your marginal tax rate. If you are in the 25% marginal tax bracket, then a $1,000 deduction reduces your tax by at most $250.

[bradylatsha]

Oh, okay. Thanks!