No, student loan forgiveness is generally not taxable in California for federal loans discharged in 2024 and earlier. Here’s why:
- Federal Tax Exemption: The American Rescue Plan Act of 2021 exempts most federal student loan forgiveness programs from federal income tax through 2025.
- California Conforms: California has legislation aligning with the federal rules. This means forgiven student debt from federal programs is typically exempt from California state income tax as well.
Important Note: This applies specifically to federal student loan forgiveness programs. Private loan forgiveness might be handled differently, so it’s always best to consult with a tax professional for specific situations.
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