MINNEAPOLIS (AP) — 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.
That's because some states tax forgiven debt as income, which means borrowers who are still paying down student loans could owe taxes on as much as $10,000 or even $20,000 that was taken off their bill.
In Mississippi, Minnesota, Wisconsin, Arkansas and North Carolina, forgiven student loans will be subject to state income taxes unless they change their laws to conform with a federal tax exemption for student loans, according to a tally by the Tax Foundation, a Washington, D.C.-based think tank.
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. But revenue officials in a few other states said they needed to do more research to know.
Biden's plan will eliminate or reduce student loan debt for more than 40 million Americans. So student loan borrowers are in every community, and audience interest is virtually limitless. Find AP's latest coverage here. https://apnews.com/article/biden-education-minnesota-mississippi-ffe9ed18bf0a434970ab09b1d89800e2