Who is affected: All clients that have student loan debt and meet the income limitation requirements for the debt to be forgiven.
The U.S. Supreme Court will hear arguments on a legal challenge to President Biden’s student loan forgiveness program in February 2023, with a final decision expected in June 2023. While the court’s resolution of the challenges to the program is likely to impact the finances of millions of Americans significantly, if the court upholds the program, it should not increase their tax burden. The IRS usually treats loan forgiveness as income to a taxpayer, but a provision in the 2021 American Rescue Plan Act specifies that most student loan forgiveness will not be taxable if received before the end of 2025.
As of the time this article is being written the State of Indiana has not passed legislation to conform with the taxability forgiveness. Indiana residents will be required to pay tax on the amount of debt forgiven