Paper handles that feature on paper bags are widely reusable, recyclable, and compostable due to their natural materials. They are recycled by being pulped and turned in to new bags, shredded to be used as a filler for protecting the contents within packaging, or recycled into new products like cardboard, creating a new life cycle for the material.
There are some paper handles that are not always recyclable though: laminated paper handles and waxed paper handles. Laminated paper handles have an added layer of film put on to it, usually to add extra protection, strength, and durability to the paper. If laminated paper ends up in a paper mill, it could contaminate the rest of the paper. In regards to waxed handles, a water-resistant layer is added when the wax is applied, which prevents the material from being recyclable as it makes it more difficult for the paper to break down.
Handles made from other materials that are attached to a paper bag, such as plastic, string, or ribbon, should be removed before recycling your bag.