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Story summary
- Starting in 2026, student loan forgiveness will be taxed as income, increasing borrowers' federal tax bills.
- The change follows the expiration of the American Rescue Plan Act of 2021 provision shielding forgiveness from taxation.
- For example, a forgiven balance of $57,000 could exceed $12,000 in taxes for borrowers in the 22% bracket.
- Borrowers eligible for forgiveness in 2025 will not owe federal taxes on their relief, even if discharged later.
