Student Loan Forgiveness Becomes Taxable Again
The expiration of a federal provision means canceled student debt is once again taxable as income. Millions of borrowers face potential tax increases as a new study warns of added financial burdens.
Canceled federal student loan balances are taxable as income again in the United States, threatening borrowers with tax bills up to $12,000 higher. The tax exemption enacted by Congress in 2021 expired at the end of 2025. This policy shift affects roughly 13 million borrowers enrolled in income-driven repayment plans over the next decade, according to Protect Borrowers.
