A Biden-era tax exclusion for certain student loan discharges is set to expire at year-end, causing discharged balances to be treated as taxable income. A group of Senate Democrats has urged the IRS to take immediate action, contending it has three viable pathways for administrative relief under existing law.
In a November 9 letter to Treasury Secretary and acting IRS Commissioner Scott Bessent, nine Senate Democrats warn that borrowers who use income-driven-repayment (IDR) plans and for whom remaining debt is discharged after a set term could see steep tax hikes beginning in 2026. The letter, headed up by Senator Elizabeth Warren (D-MA), calls on the IRS to prevent this “tax bomb” through existing legal mechanisms.
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