Are personal loans considered income for taxes?

Loan proceeds are not income for tax purposes, you're borrowing money you'll repay, not earning it. This applies to personal loans, mortgages, auto loans, student loans, and any other borrowed amount.

The tax exposure arises if the loan is partially forgiven. If you settle a $10,000 personal loan balance for $4,000, the lender typically issues a 1099-C reporting the $6,000 of forgiven debt as cancellation-of-debt income. You owe federal income tax on that $6,000 at your marginal rate.

Exception: the insolvency exclusion. If your total liabilities exceed your total assets at the time of forgiveness, the forgiven debt isn't taxable up to the amount of insolvency. File IRS Form 982. Consult a tax professional for specific cases.