Forgiven Student Loan Debt Will Be Tax-Free
President Joe Biden’s $1.9 trillion stimulus package lays the groundwork to forgive some student loan debt.
A small but significant provision in the stimulus package signed by President Biden will temporarily exclude forgiven student loans from taxes, a move that could make it easier for Biden to forgive some student debts.
[Stay on top of all the new stimulus bill developments – Sign up for the Kiplinger Today E-Newsletter. It's FREE!]
Student Loan Forgiveness Won’t Increase Your Tax Bill
President Biden campaigned on a pledge to forgive $10,000 in student loan debt, but it was unclear whether the forgiven loans would be taxable. Ordinarily, with some exceptions, if a student loan is canceled, forgiven, or discharged for less than the amount you owe, the amount of the canceled debt is treated as taxable income in the year the cancellation occurs.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Federal student loan borrowers in income-driven repayment plans are eligible to have the balance of their loans forgiven after making payments for 20 to 25 years.
Tax Relief for Cancelled Student Loan Debt Also Includes Private Student Loans
The tax relief isn’t limited to federal student loans. If your private lender forgives some or all your student loan debt, you won’t have to pay taxes on those forgiven loans, either.
The Tax Relief on Cancelled Student Loan Debt is Temporary
Unless Congress extends it, the tax relief on student loan debt cancellation expires at the end of 2025.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Emma Patch joined Kiplinger in 2020. She previously interned for Kiplinger's Retirement Report and before that, for a boutique investment firm in New York City. She served as editor-at-large and features editor for Middlebury College's student newspaper, The Campus. She specializes in travel, student debt and a number of other personal finance topics. Born in London, Emma grew up in Connecticut and now lives in Washington, D.C.
-
Jim Carrey Ran Out of Money in Retirement. Will You?
Cash-strapped retirees are returning to the workforce. How to prevent becoming one of them.
By Donna Fuscaldo Published
-
Stock Market Today: Broadcom Earnings Boost the Nasdaq
Broadcom became the latest member of the $1 trillion market-cap club after its quarterly results, while RH also rallied on earnings.
By Karee Venema Published
-
Election 2024 Childcare Debate: Harris-Walz vs. Trump-Vance Plans
Election As Election Day approaches, the Republican and Democratic tickets present different ideas for childcare and family tax credits. Here's what to know.
By Gabriella Cruz-Martínez Published
-
What Is the Tax Cuts and Jobs Act (TCJA)?
Tax Law Everything you need to know about the TCJA and key tax credits and deductions currently set to expire at the end of next year.
By Kate Schubel Last updated
-
Will EVs Drive the Vote in Election 2024 Swing States?
Tax Credits Electric vehicle tax credits have somehow become controversial. So car buyer attitudes in swing states might make a difference.
By Kate Schubel Last updated
-
SALT Deduction: Three Things to Know
Tax Deductions Changes to the state and local tax deduction and the looming TCJA expiration have brought this tax break into the spotlight.
By Kelley R. Taylor Last updated
-
IRS Skirts TikTok Ban to Sniff Out Tax Scammers
Tax Scams Social media scams caused thousands to file inaccurate returns. What does that have to do with TikTok?
By Kate Schubel Published
-
Will the Election Impact the EV Tax Credit?
Tax Credits It’s no secret electric vehicles have become a bit of a political issue. But what does that mean for your EV tax break?
By Kate Schubel Last updated
-
Kamala Harris Calls for 28% Capital Gains Tax, Diverging from Higher Biden Rate
Capital Gains Capital gains tax rates are an important issue for some voters in the upcoming November election.
By Kelley R. Taylor Last updated
-
How Trump and Harris Might Handle Expiring TCJA Tax Cuts
Election 2024 Many key provisions of the TCJA will expire soon. Here’s why it matters during the 2024 election cycle.
By Gabriella Cruz-Martínez Last updated