Maine educational opportunity tax credit

[kimmarg]

So I just found out my state (Maine) will let me deduct Student loan payments from my state taxes (not refundable but can carry over).

I currently have $5k in student loans left paying $120/month. I was planning to pay it all off in Q1 this year but since I can get $120*12 = $1440 off my taxes for the next 3.6 years (41 months) does it make sense to just put it on auto pay and take the deduction?  Is this really saving me taxes or just shuffling money around?

[walkwalkwalk]

So I guess the question is whether you pay enough in state taxes to get a tax credit for more than $1440? If so, pay that amount. Maximum benefit as soon as possible and potentially less interest payments on your student loans. Otherwise I would do like you said and pay it over the 3 year period.

[kimmarg]

Since $120/month is my listed student loan payment that's the maximum amount I can get for the credit. It goes with the lesser of $327 or my payment. Had I realized this I would not have put a big payment on it at the end of last year, but too late now.  I can't remember how much my state taxes are. we'll find out in a few weeks!