Student Loan Tax Breaks: What’s Staying, What’s Going in 2026!

The One, Big, Beautiful Bill Act (OBBBA) makes changes to two types of student loan debt. Forgiven student loan debt generally is treated as taxable income, but tax-free treatment is available for student loan debt forgiven after Dec. 31, 2020, and before Jan. 1, 2026. Under the OBBBA and beginning in 2026, only student loan debt that’s forgiven due to the death or permanent disability of a student will be excluded from income. This exclusion is permanent. If your employer has paid a portion of your student debt, you may be eligible to exclude up to $5,250 from income. The OBBBA makes this break permanent, and the limit will be adjusted annually for inflation after 2026.