Indiana Set to Confirm a Tax on Forgiven Student Loans

Indiana on Tuesday became the latest in a slew of states to confirm it will tax student loan forgiveness.

According to the Associated Press, on Tuesday, the Indiana Department of Revenue confirmed in an email that residents must list their forgiven loans as taxable income per Indiana law. The law follows the trend of other states, such as Mississippi and North Carolina.

The current tax rate in Indiana is 3.23%. As Natalie Rodriguez, the communications manager for the Department of Revenue, explains, this means those who receive $10,000 in federal student loan forgiveness will pay up to $323 in taxes. At the same time, Pell Grant recipients would likely owe $646.

Indiana House Speaker Todd Huston, R, says he expects conversations "to continue" about the state's tax policy "as we head into the next legislative session," which begins in Jan.

According to Bloomberg, New York, Pennsylvania, Kentucky, Virginia, Hawaii and Idaho are among the states who will not tax residents on student loan forgiveness.

• Some States Could Tax Biden's Student Loan Debt Relief
• Think Tank: People in 13 States May Be Taxed on Forgiven Student Loan Debt