Borrowers in 7 states may be taxed on their student loan cancellation
From NPR: “While President Biden’s sweeping student debt relief won’t be subject to federal income tax, in seven states borrowers may have to pay state income tax on all those canceled loans. Before 2021, student debt cancelation was generally considered a form of income, and therefore taxable both at the federal and usually state level. But in March of 2021, the American Rescue Plan changed that, at least temporarily: Until the end of 2025, Congress said, the U.S. government will not consider canceled student loan debts to be taxable income. … But seven states are out of step with federal tax policy and have either said they will tax debt relief or still have policies that could require it, barring a change in state law.”View the full article from NPR.
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