Californians could get tax waiver on student debt relief
President Biden remains confident that his federal student loan forgiveness will go into action in the coming weeks, but under current rules some borrowers could be taxed on the relief received. Under federal law, the Biden initiative will not be subject to tax from the Internal Revenue Service, but California state law may treat it as taxable income.
But changes are in the works to allow borrowers in California to keep the whole amount, up to $20,000 in student debt forgiveness for students from low-income households.
“Californians who get student debt relief shouldn’t be hit with taxes for it,” said Gov. Gavin Newsom. “I look forward to working closely with the Legislature to get this done through early action.”
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