Key Points:
- Borrowers in thirteen states who have student debt canceled under the Biden administration’s plan may still be taxed hundreds of dollars next year on their forgiven loans.
- The Tax Foundation’s Vice President of State Projects Jared Walczak said that the maximum likely tax liability would double for those who have $20,000 in debt forgiven. For two states — New York and Wisconsin — Walczak’s analysis did not include the rare case in which the maximum tax amount would change for someone who may qualify for loan forgiveness based on 2020 earnings only to enter the top-income bracket this year.
- According to the White House, more than 60% of borrowers are Pell Grant recipients, which means they will have to pay the higher tax rate.
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