Wednesday, November 30, 2022
53 F
Oxnard
More

    Latest Posts

    Setting Brushfires of Freedom by Don Jans

    Newsom Urges California Lawmakers Not to Tax Forgiven Federal Student Loans

    Gov. Gavin Newsom on Saturday called on the California Legislature to act quickly to prevent student loan borrowers from having to pay state income taxes on up to $20,000 in federal debt forgiveness.

    The Biden administration announced in August a sweeping, one-time loan forgiveness program that would wipe out thousands of dollars in federal direct loan debt. Borrowers who meet the program’s income limits — less than $125,000 for an individual or $250,000 for a couple — will have up to $10,000 in debt forgiven, or up to $20,000 if they received a federal Pell Grant.

    Tax authorities treat forgiven debt in many cases as income. Under federal law, the amounts forgiven through the Biden initiative will be ignored by the Internal Revenue Service. But under current state law, analysts say, they will be treated as taxable income in California.

    Newsom said the preliminary budget he submits in January will include a proposal to exempt the forgiven debt from state taxes. The change would save more than 3.5 million borrowers in the state — including more than 2.3 million Pell Grant recipients — up to $1.3 billion, he said.

    “Californians who get student debt relief shouldn’t be hit with taxes for it,” Newsom said in a statement. “I look forward to working closely with the Legislature to get this done through early action.”

    Newsom’s position aligns him with the Legislature’s top Democrats. The leaders of the state Assembly and Senate tweeted in September that they would make sure the forgiven amounts aren’t taxable.

    The U.S. Education Department started accepting applications for loan forgivenesslast month, and it was expected to start forgiving debt by the end of the year. But legal tussles have cast a cloud over its future.

    The program is being challenged in several courts across the country by Republican officials and conservative groups. Although judges have blocked at least two of the cases because the plaintiffs lacked standing to sue, a federal appeals court has temporarily stopped the Education Department from forgiving loans while it considers six GOP-led states’ request for an injunction against the debt relief.

    Click here to read the full article at the LA Times


    TELL YOUR FRIENDS ABOUT CITIZENS JOURNAL  Please keep us publishing – DONATE

    - Advertisement -
    0 0 votes
    Article Rating
    Subscribe
    Notify of
    guest

    0 Comments
    Inline Feedbacks
    View all comments

    Latest Posts

    advertisement

    Don't Miss

    Subscribe

    To receive the news in your inbox

    0
    Would love your thoughts, please comment.x
    ()
    x