8 States That Might Tax Student Debt Forgiveness

Contributing sentiments towards policy:

57% : States on this list are ordered by the share of student loan borrowers who are 90+ days past due.
53% : Data on the number of student loan borrowers by state in 2021; average student loan debt balances by state in 2021; and percentage of student loans borrowers who are 90+ days past due on their loans come from the Federal Reserve Bank of New York.
50% : For example, unless Arkansas implements a legislative fix, anyone there who benefits from this debt forgiveness could pay up to $550 in state income tax and more if they qualify for the additional relief, according to KFSM news.
48% : Discharged student loan debt is typically considered a form of income subject to federal income tax, but the American Rescue Plan Act of March 2021 included a moratorium on taxing student loan debt forgiveness through 2025.
48% : About 2.3 million borrowers live in states with situations similar to California's, waiting in limbo to see what, if anything, they will have to pay in taxes next year.
47% : Some of these fortunate debtors, however, could wind up on the hook for hundreds of dollars in income taxes on the forgiven debt.
35% : President Joe Biden's executive order to wipe out some student loan debt raised immediate questions about how states would treat this relief for tax purposes.
33% : This means that student loans discharged under Biden's plan announced in August will not be taxed at the federal level.

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