Senate relief bill would exempt student loan forgiveness from taxes
The Senate Democrats’ proposed $ 1.9 trillion coronavirus relief package, unveiled Thursday, would exempt student loan forgiveness from 2021 to 2025 from taxes.
The exemption would apply to forgiveness of student loans made, insured or guaranteed by the federal or state government, as well as loans made by private lenders and educational institutions. It would not apply in cases where the release of the loan is granted by an educational institution or a private lender in exchange for services rendered for them.
The Joint Committee on Taxation estimated that the provision would cost $ 44 million over 10 years.
Under current law, debt forgiveness is generally included in taxable income, and student loan cancellation is only tax exempt under certain circumstances. Check out more at Citrus North.
The Senate is expected to pass the back-up plan this weekend, but lawmakers are still negotiating the details of the bill, especially those related to unemployment benefits.
The relief program does not by itself pay off student debt. But the student loan tax exemption provision could help prevent people from facing large tax bills if their debt is forgiven in the future.
President BidenJoe BidenBiden on Richardson suspension: “Rules are rules” There is no “third way” for Iranian diplomacy Republicans eyeing White House take tough line on immigration said he wanted to write off up to $ 10,000 per borrower, preferably through legislation. Many progressives want the president to write off up to $ 50,000 per borrower and do so through executive action.
“The provision of the Senate bill is probably a necessary precursor to any kind of general forgiveness,” said Matthew Chingos, vice president of education data and policy at the Urban Institute.