President Joe Biden finally made the decision to cancel student loans across the country thanks to the federal student loan forgiveness plan. Anyone wondering if they will have to pay taxes on this canceled debt, answering this question is not as easy as it seems.

In fact, it all depends on where you live. Some states have different rules in place regarding taxes, especially with student loans. Even if you don’t owe the IRSchances are you owe taxes to the state where you live.

No matter which program you get your student loan forgiveness from, there are a few things you need to know about how these student loans will affect your tax bill. There are also tax deductions that will come in handy to help lower your tax bill. Plus, these will help boost your tax refund for next year.

Most states do not require tax forgiveness on evaded debt, some do.

In most states, taxes on canceled student loans are not imposed on individuals. But some States comply with the provisions of the US Rescue Act in order to prevent taxation on forgiveness of student loan debt by 2025. This provided some states with the ability to tax forgiven student debt.

Currently, only three states plan to tax student loans. These states are Indiana, Mississippi and North Carolina. Other states like Arkansas, Minnesota and Wisconsin still haven’t confirmed their tax plans. State tax the interest rate fluctuates between 2% and 3.23%.

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