A table is topped with the question "As things stand, which debt relief options require me to pay taxes?" The data below answers that question: For one-time relief of $10,000 to $20,000, you don't have to pay federal taxes, but you do have to pay California state taxes. If your debt is cleared through an income-driven repayment plan, you don't have to pay federal or California state taxes. If your debt is cleared through the Public Service Loan Forgiveness program, you don't have to pay federal or California state taxes.