President Joe Biden's recently unveiled student debt forgiveness proposal might just have an unintended consequence for residents of six states: an increased tax bill. While most states plan to follow the federal government's lead and not treat one-time student loan forgiveness as taxable income, six states have no such plans. While Arkansas, Minnesota, West Virginia, and Wisconsin might decide to exempt federal student loan forgiveness from taxation, two states—Mississippi and North Carolina—have formal plans to tax loan forgiveness.
The results of this taxation could be an unexpected financial hit to many receiving loan forgiveness. According to Inc., depending on the state and the amount forgiven, individuals may see their taxes rise by $500 to $985.
