Stimulus Bill Has This Hidden Student Loan Tax Benefit

The provision of the stimulus bill, if enacted, would change this, at least temporarily. It would exempt all student debt cancellation — whether complete or partial — from federal taxation. And the provision’s language is broad in that it appears to cover all types of student loans including Direct federal loans, federally guaranteed FFEL loans, and private student loans as well.

Perhaps most importantly, the window of coverage to January 1, 2026 means that it also, in theory, would cover any broad student debt cancellation enacted by President Biden or by Congress in the next four years, and would exempt any such cancellation of student debt from taxation. State taxing authorities, however, could still potentially consider student loan forgiveness as taxable.

Related:

17 Million Won’t Get Stimulus Checks—Expect The Same For Student Loan Cancellation

According to the Washington Post, this means that 17 million fewer Americans — including 12 million adults and 5 million children — will get a stimulus payment. As a result, individuals who earn between $80,000 and $100,000 as well as married or joint filers who earn between $160,000 and $200,000 will not get any stimulus check.