Taxed on Forgiveness Loans
September 9, 2022
Just last month the Biden Admin announced a plan for Student Loan Forgiveness. Any person with low-middle income would be eligible for the cancellation grant. The grant would provide 10,000-20,000 dollars in relief. The idea was to not be federally taxed (as protected by the American Rescue Plan) as a way to help soothe any financial hardships caused by the pandemic. As the plan develops, there is the possibility that there will be a tax if considered an income. At least 7 states could tax forgiven loans predicted by the Tax Foundation. The way the Student-Loan Forgiveness Act will be put in place by every state varies, as taxation doesn’t always align.
