Student Loan Forgiveness = State Income

According to the Tax Foundation, as quoted by Forbes Magazine, 13 states could treat President Biden’s student loan forgiveness initiative as taxable income to borrowers.

The states are Arkansas, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Mississippi, New York, Pennsylvania, South Carolina, Virginia, West Virginia, and Wisconsin.

The Tax Foundation estimates that borrowers could incur anywhere from $300 to over $1,000 in state taxes, depending on the specific state, if they receive $10,000 in student loan forgiveness through the Biden plan. These figures could double for Pell Grant recipients, who are eligible to receive up to $20,000 in student loan forgiveness.

Of course, most of the states still have time to pass legislation that would classify this particular debt forgiveness as non-taxable.