Massachusetts not expected to tax federal student loan forgiveness
BOSTON - If you're getting federal student loan relief in Massachusetts, there's good news. You won't have to pay state taxes on it.
The White House announced last week it's canceling up to $20,000 in federal student loan debt for millions of Americans. The Biden administration said that money would not be considered income on federal taxes.
But, according to an analysis from the Tax Foundation, an independent tax policy nonprofit, 13 states might consider it taxable income, including Massachusetts.
The Massachusetts Department of Revenue had been trying to figure out if there would be a tax bill for borrowers. A recent state law prevents certain student loan forgiveness from being taxed like income, and it now appears that the Biden plan qualifies.
As a result, the Department of Revenue expects the federal student loan forgiveness will not be taxable in Massachusetts.
If it was, some people may have been required to pay up to $500 in state taxes, according to the foundation's analysis.
