Report Projects Potential Federal Tax Bills on US Student Loan Forgiveness

A new report from Protect Borrowers indicates that federal taxes on canceled student debt could lead to a surprise tax bill of $6,000 to $12,000 for US households in 2026. This concern arises as a temporary federal tax exemption for canceled student debt expired in 2025. The analysis applied 2026 federal tax rules to average amounts forgiven through income-driven repayment plans, potentially impacting many borrowers.