Clients anticipating major student loan forgiveness in the new year could be in for an unwelcome tax bill. The American Rescue Plan Act of 2021, which exempted forgiven federal student debt from taxation over recent years, expired on Dec. 31, 2025. And without a legislative extension, the student loan "tax bomb" is back for 2026. Under the reinstated rule, canceled debt is treated as ordinary income, creating potentially significant liquidity strain. On a typical forgiven balance of $57,000, federal tax ...