Which of the following can reduce adjusted gross income?

The deduction for student loan interest payments is a specific tax benefit that allows taxpayers to reduce their adjusted gross income (AGI) by deducting a portion of the interest they have paid on qualified student loans. This deduction can help lower the overall tax burden by effectively reducing the income amount on which tax liability is calculated.

Student loan interest deductions can be especially beneficial for individuals who are still repaying their student loans, providing relief during a time when they may have limited financial resources. The deduction is limited to a maximum amount per year and is subject to income phase-outs, meaning that as a taxpayer's income increases, the ability to claim this deduction may decrease.

In contrast, other options listed do not have the same effect on AGI. Dependent exemptions have been eliminated in tax years following the Tax Cuts and Jobs Act, so they do not contribute to reducing AGI anymore. Taxable capital gains do not reduce AGI; instead, they increase the taxable income. Employment income, being a part of gross income, also contributes to AGI instead of reducing it. Thus, the deduction for student loan interest payments stands out as the legitimate method for reducing AGI among the choices provided.