Modified treatment of student loan forgiveness for discharges in 2021 through 2025

 

On page 21 of the 2021 Pub. 525PDF, several exceptions are listed for the inclusion of canceled student loan debt in income. Please note the following additional information for certain student loans.

The American Rescue Plan Act of 2021 modified the treatment of student loan forgiveness for discharges in 2021 through 2025. Generally, if you are responsible for making loan payments, and the loan is canceled or repaid by someone else, you must include the amount that was canceled or paid on your behalf in your gross income for tax purposes. However, in certain circumstances, you may be able to exclude this amount from gross income if the loan was one of the following.

  • A loan for postsecondary educational expenses.
  • A private education loan.
  • A loan from an educational organization described in section 170(b)(1)(A)(ii).
  • A loan from an organization exempt from tax under section 501(a) to refinance a student loan.

See Pubs. 4681PDF and 970PDF for further details.