The One Big Beautiful Bill Act introduces new tax deductions such as the "No Tax on Tips" provision for tipped workers, car loan deductions, and a child credit. However, some deductions, such as student loan forgiveness, will not be renewed and may become taxable starting in 2026. Key information for student loan borrowers includes changes to taxation on forgiven loans and the expiration of tax-free student loan forgiveness. Certain tax provisions are made permanent, such as exclusions for loans discharged due to death or disability and employer-provided repayment assistance.
There are two things that student loan borrowers need to know: There are changes in the way student debt is taxed, and the other is Congress didn't extend tax-free student loan forgiveness.
Forgiven student loan debt is generally considered taxable income in the year it's discharged. However, the American Rescue Plan Act of 2021 temporarily excluded certain types of student loan forgiveness from taxable income through December 31, 2025.
While student loan forgiveness remains tax-free through the end of 2025, it will be subject to income tax on the amount discharged starting at the beginning of 2026.
Loan discharge due to death or total disability will continue to be excluded from taxable income. Employer-provided student loan repayment assistance, up to $5,250 annually, will remain tax-free under qualified educational assistance.
Collection
[
|
...
]