Student loan forgiveness will be taxable in Minnesota

Student loan forgiveness won't be taxed federally, but it will be taxable in Minnesota unless the state Legislature acts, Minnesota revenue officials say.

MINNEAPOLIS (FOX 9) - Student loan forgiveness won't be taxed federally, but it will be taxable in Minnesota unless the state Legislature acts, Minnesota revenue officials say.

The reason is the Legislature never passed its 2022 tax bill to conform with federal changes, including student loan forgiveness.

The forgiveness would increase a person's tax liability and potentially reduce tax credits or deductions a person would otherwise be eligible to receive, state revenue officials said.

RELATED: 5 things you need to know about student loan forgiveness

This news comes a day after President Joe Biden on Wednesday announced a wide-sweeping debt cancellation program in which many could get $10,000 forgiven — and even more for those with the greatest financial need. Borrowers who earn less than $125,000 a year will be eligible for $10,000 in loan forgiveness. Those who received Federal Pell Grants, a form of need-based federal financial aid, can get $20,000 of loan forgiveness.