Will student loan forgiveness be taxed in Ohio? – The Columbus Dispatch

While some state legislatures are debating whether or not their residents will have to pay state taxes on this latest round of student loan forgiveness by the federal government, Ohioans won’t owe taxes on their canceled debts.
After President Joe Biden announced his decision to cancel up to $20,000 in federal student loan debt in August, some states like Indiana and Mississippi said they would consider canceled student loans as taxable income.
In Ohio, forgiven student loan debt is not currently subject to state taxes.
According to the Ohio Department of Taxation, the state’s income tax calculation begins with federal adjusted gross income, and Ohio law does not include a specific provision to tax forgiven student loan debt.
Student loan forgiveness would only be taxed by Ohio if federal law required that canceled debt be included in federal adjusted gross income, according to the department.
At the federal level, forgiven student loans won’t be subject to a federal income tax either because the American Rescue Plan Act of 2021 made student loan debt tax-free until 2025.
Most U.S. states consider student loan forgiveness as nontaxable income, and some are waiving their tax laws for this specific round of forgiveness. But not all.
In all, seven states are currently considering state-level taxation on forgiven student loans, including Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina and Wisconsin, according to a preliminary report from the nonprofit Tax Foundation.
Sheridan Hendrix is a higher education reporter for The Columbus Dispatch. Sign up for her Mobile Newsroom newsletter here and Extra Credit, her education newsletter, here.
shendrix@dispatch.com
@sheridan120

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