Are Student Loans Being Taken Out of Taxes This Year?

For most borrowers, no. On January 16, 2026, the U.S. Department of Education announced that it is delaying involuntary collections on defaulted federal student loans, including tax refund seizures through the Treasury Offset Program.¹ So the short answer to whether student loans are being taken out of taxes this year is that they should not be, as long as the delay remains in place. Other federal debts, though, are a different story.

What the January 2026 Delay Covers

The Department paused two things: Treasury Offset Program referrals for defaulted federal student loans, and administrative wage garnishment. The stated reason is to give the agency time to implement repayment reforms under the Working Families Tax Cuts Act, including a new income-driven repayment plan scheduled to become available on July 1, 2026.¹

The announcement did not include a specific end date. Borrowers should watch Federal Student Aid’s website for updates on when collections will resume. The pause also covers Social Security benefit offsets, which the Treasury can normally reduce by up to 15 percent to satisfy a defaulted federal student loan.²

Two important limits on the good news:

The delay applies to federal student loans. Private student loans were never part of the Treasury Offset Program in the first place; a private lender cannot touch your refund without suing you and winning a court judgment.³
The delay does not cover other federal or state debts. Unpaid child support, back federal taxes, and state income tax obligations can still trigger a refund offset this filing season.³

The pause is also not the same as the Fresh Start program, which ended on October 2, 2024, and actually moved eligible loans out of default.⁴ The current delay stops collection activity but does not change your loan’s default status. If you were in default before January 16, 2026, you are still in default now.

How Refund Offsets Work When They’re Active

Understanding the mechanics matters, because the delay will end at some point. A federal student loan enters default after roughly 270 days without a payment and without an approved deferment or forbearance, which is about nine months.⁵ Once a loan is in default, the Department of Education can refer the debt to the Treasury Offset Program, run by the Bureau of the Fiscal Service.⁶

When you file your tax return, the Bureau matches your Social Security number against a database of debtors. If it finds a match, some or all of your refund is redirected to the loan balance before the money reaches you. Before any offset happens, federal law requires at least 60 days’ written notice to your last known address, along with an opportunity to dispute the debt or show that it is not past due.⁷

If You File Jointly and Your Spouse Owes

This is where the delay’s limits matter most in practice. If you file a joint return and your spouse has an offset-eligible debt, such as unpaid child support or back taxes, the Treasury can seize the entire joint refund, including your share. To protect your portion, file IRS Form 8379, Injured Spouse Allocation.⁸ The form splits income, deductions, and credits between spouses so the IRS can calculate how much of the refund belongs to each of you. Only the debtor spouse’s share can be taken.

You can file Form 8379 three ways, and the timing differs:

Attached to an e-filed joint return: about 11 weeks to process.
Attached to a paper joint return: about 14 weeks.
Mailed on its own after a refund has already been offset: about 8 weeks.⁹

You will need a copy of your completed joint return handy, because the form asks you to divide income and deductions between each spouse using those figures.¹⁰

How to Check Whether Any Offset Is Pending Against You

Even with student loan collections paused, it’s worth confirming that nothing else is queued up. Call the Treasury Offset Program’s automated line at 800-304-3107.¹¹ The system will tell you whether a debt has been referred for offset under your Social Security number and identify the agency that submitted it. The line cannot negotiate, discuss the underlying debt, or issue refunds; to resolve anything, you contact the submitting agency directly.

For your federal student loans specifically, log into StudentAid.gov. Your dashboard shows whether each loan is in good standing, delinquent, or in default, and identifies the servicer or the Default Resolution Group if the loan has been referred for collections.

Use the Pause to Get Out of Default

The delay is temporary. When it ends, borrowers still in default will again face tax refund seizures, wage garnishment, and Social Security offsets. Two paths exist to move a defaulted federal loan out of default now, before that happens.

Loan Rehabilitation

Rehabilitation requires nine on-time, voluntary payments within ten consecutive months, which means you can miss one month and still finish on schedule. The payment amount is based on your income, typically calculated as 15 percent of discretionary income divided by 12.¹² After the ninth payment, the default is removed from your credit report and you regain eligibility for federal student aid, deferment, forbearance, and income-driven repayment plans.¹³

There is also a partway benefit. After five rehabilitation payments, involuntary collections such as tax refund offsets and wage garnishment must stop, even though the loan is technically still in default.¹² To start, contact the Default Resolution Group at the Department of Education. Have your most recent tax return or transcript available so they can calculate your payment.

Rehabilitation has historically been a one-time option. A proposed rule under the Working Families Tax Cuts Act would give borrowers who already rehabilitated once a second chance, but that rule has not been finalized.¹⁴

Direct Consolidation Loan

Consolidation is the other route. You combine your defaulted loans into a new Direct Consolidation Loan and either make satisfactory repayment arrangements on the defaulted loan first or agree to repay the new consolidation loan under an income-driven repayment plan.¹⁵ Consolidation moves the loan out of default right away, without months of payments. The trade-off: unlike rehabilitation, it does not erase the record of default from your credit history, which can remain for up to seven years from when it was first reported.

If you have already used your one rehabilitation opportunity, consolidation is the immediate option unless and until the proposed second-chance rule is finalized.

If a Refund Was Already Taken and You Think It Was Wrong

If your refund was offset and you believe the offset was incorrect, for example the debt was paid off, discharged in bankruptcy, or not actually in default, you can file an administrative appeal with the Department of Education. Send a written request explaining why the offset was wrong, with supporting documents such as payment records, discharge orders, or account statements. The Department’s Office of Hearings and Appeals handles these disputes, and responses generally take several months.

If the IRS is slow to act on a hardship-related request, you can also contact the Taxpayer Advocate Service by filing Form 911.

1
U.S. Department of Education. U.S. Department of Education Delays Involuntary Collections Amid Ongoing Student Loan Repayment Improvements
2
Bureau of the Fiscal Service. TOP Program Rules and Requirements Fact Sheet
3
Taxpayer Advocate Service. Refund Offsets
4
Federal Student Aid. A Fresh Start for Federal Student Loan Borrowers in Default
5
Federal Student Aid. Student Loan Default and Collections – FAQs
6
eCFR. 31 CFR Part 285 Subpart A – Disbursing Official Offset
7
Office of the Law Revision Counsel. 31 USC 3720A – Reduction of Tax Refund by Amount of Debt
8
Internal Revenue Service. About Form 8379 – Injured Spouse Allocation
9
Internal Revenue Service. Injured Spouse
10
Internal Revenue Service. Instructions for Form 8379
11
Bureau of the Fiscal Service. Treasury Offset Program – Contact Us
12
Federal Student Aid. Student Loan Rehabilitation for Borrowers in Default – FAQs
13
Federal Student Aid. Credit Reporting
14
U.S. Department of Education. U.S. Department of Education Issues Proposed Rule to Make Higher Education More Affordable and Simplify Student Loan Repayment
15
eCFR. 34 CFR 685.220 – Consolidation