President Joe Biden’s student loan forgiveness plan could lift crushing debt burdens from millions of borrowers, but the tax man may demand a cut of the relief in some states.
Spokespeople for tax agencies in several states — including Virginia, Idaho, New York, West Virginia, Pennsylvania and Kentucky — told The Associated Press that their states definitely won’t tax student loans forgiven under Biden’s program. Revenue officials in a few other states said they needed to do more research to know., Illinois is also not one of the states that will tax the forgiven debt.
Under terms of the American Rescue Plan Act of 2021, an exclusion was added exempting student loan forgiveness from federal income tax returns. That exemption will remain in effect through the end of 2025, according to TCI. will not be required to report that income on their taxes. Any relief in states that would tax the forgiven debt would have to come from their Legislatures. Leaders of the Minnesota Legislature and Democratic Gov. Tim Walz have indicated in recent media interviews that there's broad support for a fix, which could come during the 2023 session, or even earlier on the
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Some states could tax Biden's student loan debt reliefPresident Joe Biden's student loan forgiveness plan could lift crushing debt burdens from millions of borrowers, but the tax man may demand a cut of the relief in some states.
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