STUDENT LOANS and State Taxes

By Staff Reporters

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If your student loans were forgiven, you may still owe state taxes

Though widespread federal student loan relief remains on hold, you may have received student loan forgiveness through the Public Service Loan Forgiveness program or another similar endeavor. if you had any balances forgiven in 2022, you won’t owe federal taxes on the canceled amount. That’s because of a provision tucked into the 2021 American Rescue Plan, preventing forgiven post-secondary education loans from federal taxation through 2025. 

However, there are a handful of states where forgiven loan balances may be taxed. IndianaMinnesotaMississippi and North Carolina have confirmed they will tax any student loan debt relief on your 2022 taxes. A few other states may as well, though the details are still being hammered out.

And, if you live in one of the states taxing forgiven student loans, you may be on the hook for county taxes on your debt relief, as well.

CITE: https://www.r2library.com/Resource/Title/082610254

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