Is forgiven student loan debt taxable?

It depends on the program and the year. Normally, canceled debt is treated as taxable income by the IRS, so a forgiven balance could trigger a tax bill. But there are big exceptions: Public Service Loan Forgiveness (PSLF) is tax-free at the federal level, and under current law through 2025, most student loan forgiveness — including amounts forgiven at the end of income-driven repayment plans — is also excluded from federal taxable income. The catch is that this federal exclusion is set to expire, and some states tax forgiven amounts even when the federal government doesn't, so a state 'tax bomb' is possible. Because the rules are in flux, confirm the current treatment before you assume forgiveness is free, especially for IDR forgiveness happening in future years. If you're nearing forgiveness, ask a tax professional and check both federal and your state's rules so a tax bill doesn't surprise you.