26/01/2025
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09:52
CSTIn 2024, Joe Biden made a drastic decision that was criticized by various sectors of the United States, the former president decided to forgive the federal student debt. A debt that exceeded 180 million dollars for 4.9 million people, madness. After this, many have many doubts about what will happen now, as some consider that it could have some consequences in other federal areas of the country. What is certain is that the President of the United States, Donald Trump, will surely have a new plan for educational reform and will want to get rid of this huge debt that is breathing down the neck of an entire country. Many benefited from these cancellations under the Biden administration, but many are wondering if this could affect their taxes. Here we will tell you a little more about it.The Bailout Act of 2021 exempts student loan forgiveness from federal taxes through the end of 2025. It doesn’t matter if the debt is discharged through the Public Service Program, income-driven repayment plans, or borrower defense. The Biden administration has used these methods to provide assistance. On this side, you shouldn’t have to worry, but you have to be very alert to any developments, because Donald Trump could have the last word for years to come. Although the federal government forgives student debt, some states may tax the forgiveness.Some states do not follow federal rules and may tax loan forgiveness, according to Mark Kantrowitz, a higher education expert. Check with your state or an accountant to see if you owe taxes. Remember to stay on top of this and don’t get caught off guard at the last minute. If the American Rescue Plan ends, more states may impose taxes on forgiven debt, so check back and stay tuned for updates on this issue.