What to know at tax time

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

What to know at tax time

Rhetoric & Writing Studies Major, Adamary Garcia studies inside of the Perry-Castaneda Library at the University of Texas at Austin on February 22, 2024 in Austin, Texas.

Brandon Bell  | Getty Images

If your federal

This is the hidden content, please

• Sign In
• or
• Sign Up

in 2024, you may be wondering if there are any tax implications.

Many borrowers have benefited from education debt cancellation under the Biden administration. While in office so far, President Joe Biden has cleared nearly $180 billion in federal student loans for 4.9 million people. More than 1 million people had their debt cleared in 2024.

If you’ve had your debt excused last year, here’s what to know at tax time.

No federal taxes on relief through 2025

The 

This is the hidden content, please

• Sign In
• or
• Sign Up

 Act of 2021 made 

This is the hidden content, please

• Sign In
• or
• Sign Up

 tax-free at the federal level through the end of 2025, said higher education expert Mark Kantrowitz. That means you won’t owe anything to Uncle Sam on any federal education debt cleared throughout 2024.

It shouldn’t matter under what program the loans were forgiven, be it

This is the hidden content, please

• Sign In
• or
• Sign Up

, an income-driven repayment plan or

This is the hidden content, please

• Sign In
• or
• Sign Up

. The Biden administration has delivered most of its relief through one of those avenues.

(In case you aren’t familiar:

This is the hidden content, please

• Sign In
• or
• Sign Up

leads to student debt erasure for certain public servants after a decade of qualifying payments. Meanwhile,

This is the hidden content, please

• Sign In
• or
• Sign Up

conclude in debt cancellation after a certain ******* of payments, typically 20 years or 25 years. And

This is the hidden content, please

• Sign In
• or
• Sign Up

wipes away the debt for students who’ve been defrauded by their schools.)

More from Personal Finance:
After the holidays comes ‘Returnuary’ 
Economists have ‘really had it wrong’ about recession
Trump tariffs would likely have a cost for consumers

Even canceled private student debt shouldn’t trigger a federal tax bill thanks to the terms of the American Rescue Plan, said Carolina Rodriguez, director of the Education Debt Consumer Assistance Program, based in New York. That law is set to expire Dec. 31, 2025.

Meanwhile, student debt excused in bankruptcy should never be subject to federal or state taxes, Kantrowitz added.

You could owe taxes to your state

Despite the current federal policy on forgiven student debt, it’s possible a borrower could still face 

This is the hidden content, please

• Sign In
• or
• Sign Up

.

Currently, a handful of states tax certain kinds of student loan forgiveness, Kantrowitz said. That could be because their state tax code doesn’t conform to the federal one or hasn’t been updated to reflect the American Rescue Plan.

You’ll want to check with your state or a tax professional to learn if your relief triggers any liability.

Many states mirror their student loan forgiveness tax policy on the federal government. As a result, if the American Rescue Plan’s provision expires, more states could levy the forgiven debt again, too.

Don’t miss these insights from CNBC PRO

This is the hidden content, please

• Sign In
• or
• Sign Up

#tax #time

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up