Last week, President Joe Biden announced student debt cancellations of $10,000 for those who earn less than $125,000. People who received Pell Grants can get $20,000 forgiven.
Under the American Rescue Plan, student loan forgiveness is not taxable on a federal level.
In 13 states, though, people could be taxed on student loan forgiveness, such as those in Arkansas, who may have to pay $550, according to the Tax Foundation.
Massachusetts and Mississippi residents might have to shell out up to $500, and in Hawaii, $1,100.
However, some states could still take action to avoid borrowers incurring taxation on their student loan forgiveness by taking administrative or legislative action, Forbes reports.
Massachusetts Gov. Charlie Baker said his state, like others, is still waiting on federal guidance on how this will work, according to NewsNation local affiliate WWLP.
The Tax Foundation noted that in the coming weeks and months, other states will also likely issue guidance on how they will treat student loan debt relief.
Those living in states that tax for student loan forgiveness will be required to pay it in the same tax year.
Those who received Pell Grants, which are typically given to low-income students, may have to pay double.
States that could tax student loans, according to the Tax Foundation:
West Virginia- $650