Will this impact my taxes?
Note: On November 10, 2022, a court order blocked the Federal Student Loan Debt Relief program. Please visit studentaid.gov to stay up-to-date with the latest information.
Debt relief will not be treated as taxable income for federal tax purposes. However, there are seven states that may treat forgiven loans as earned income.
As of November 1, 2022, Indiana, Minnesota, Mississippi, and North Carolina intend to tax loan forgiveness while Arkansas, California, and Wisconsin have not yet made a decision. Barring changes to state tax laws, you may be liable for additional state income taxes.
You should check with your state of residence for the latest information.