Will Student Loan Forgiveness Raise Taxes?

President Joe Biden has announced new updates to the Student Loan Forgiveness plan. This plan can erase up to $10,000 of federal student loans and up to $20,000 for those students who received a Pell Grant and make less than $125,000 per year. You may be wondering if this will cause an up rise in taxes. The answer is no regarding federal tax returns. However, this doesn’t rule out state taxes on the forgiven debt which you can still be responsible for. While some states naturally conform to federal rules, others may see this as income, making it a taxable event. How sure are you whether your state will levy taxes for student loan forgiveness? If you are uncertain contact us at XQ CPA before you file your state tax return and we will be glad to assist! #Taxes #Studentloans #CPA #Debt