is personal loan tax deductible? personal loans are one of the most convenient options. Loans for personal use may be quite beneficial in situations like paying for college, dealing with a medical emergency, or saving money to pay for an important life event such as your dream wedding. Depending on the reason for the borrowing, you may deduct interest paid on a personal loan.

Personal loans are exempt from taxation since the loan amount is not in your taxable income. As a result, personal loans are free of federal income tax. However, the loan must originate from a reputable source, such as a bank or other financial institution.