Federal student loan forgiveness may become taxable in 2026, potentially increasing borrowers' tax bills as forgiven amounts could be counted as income. This tax-free provision, active until 2025 for certain repayment plans, is set to end. While 2025 borrowers are exempt from federal taxes on forgiven amounts, some states might still impose taxes. Delays for some 2025-eligible borrowers are being resolved, with forgiveness expected before the 2026 tax season.