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.
-
Increasingly, Red States Embrace Marijuana: The Kiplinger LetterThe Kiplinger Letter Ohio becomes the 24th state to legalize marijuana for recreational use via a voter referendum.
-
Charlie Munger of Berkshire Hathaway Has Died
Charlie Munger, vice chair of Berkshire Hathaway, died Tuesday, the company confirmed.
-
Social Media, Guns, Taxes, Abortion: New Supreme Court Cases You Need to Know
Supreme Court The U.S. Supreme Court will hear several cases this fall that could significantly impact your rights and wealth. Here are a few of them to watch.
-
What Would a Government Shutdown Do to the IRS?
IRS With a government shutdown looming, some wonder how IRS operations will be affected.
-
How Three New Supreme Court Rulings Impact Your Money
Supreme Court New U.S. Supreme Court decisions could directly impact your bank account privacy, student loan payments, home equity, and property taxes. Here’s what you need to know.
-
Businesses Would Get Lots of Tax Savings Under House GOP Plan: Kiplinger Tax Letter
Kiplinger Tax Letter The House GOP tax plan indicates what’s to come if Republicans control Congress and the White House after 2024.
-
What Is the Bonus 'Guaranteed' Standard Deduction?
Legislation A proposed Republican tax cut package contains a 'bonus' of up to $4,000 for the current standard deduction. Could it help?
-
PGA Tour LIV Golf Alliance Sparks Tax Debate, Government Probes
Tax Exempt Status The planned 'merger' between the PGA Tour and Saudi-backed LIV Golf has raised tax concerns in Congress and prompted government investigations.
-
Are Student Loans Being Forgiven or Not?
Student Loans The House and Senate voted to repeal President Biden’s student loan forgiveness plan, but does it even matter?
-
House Republican $237B Tax Cut Package Revealed
Legislation With a debt ceiling agreement in place, Republicans are proposing billions in tax cuts along with other key tax changes.
