Surprise: Borrowers May Face Up to $1,100 in State Taxes on Forgiven Student Loans
- Thirteen states have laws that levy taxes on forgiven debt
- New Yorkers may face up to $685 in taxes on $10,000 in relief
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Residents of New York, Virginia and eleven other states could end up with a surprise tax hit of hundreds of dollars next year on forgiven student loans.
President Joe Biden’s announcement that the government would forgive some student debt for individuals earning less than $125,000 was welcome news to many carrying large loan balances. But 13 states have laws that treat this forgiven debt as income, meaning that it’s subject to state levies on earnings.