Most personal loans are not considered taxable income by the IRS. However, there are a few exceptions to this rule. If you use a personal loan to purchase a home, the interest you pay on the loan may be tax deductible. Personal loans can also be used for other purposes such as consolidating debt or paying for major expenses, and the interest paid on these types of loans may also be tax deductible. Consult with a tax advisor to determine if your personal loan is considered taxable income.