Forgiven Student Loans Won’t be Taxed as Income by Pennsylvania, Governor Says
Bloomberg reported earlier this week that Pennsylvania was among 13 states that treat forgiven debts as income.
Sep. 01, 2022
Republican & Herald, Pottsville, Pa. (TNS)
Gov. Tom Wolf said Wednesday that Pennsylvania student loan borrowers who will receive up to $20,000 in relief under President Biden’s Student Debt Relief Plan will not be taxed on that relief.
That follows the governor’s action late last year on the student loan debt relief Pennsylvanians received from the federal Public Service Loan Forgiveness Program and the Pennsylvania Student Loan Relief for Nurses Program.
Through that, the Department of Revenue issued a revised tax bulletin to clarify the language around student loan forgiveness.
“Cumulative federal student loan debt is holding back Pennsylvanians who want to pay their bills, afford housing and have a little financial breathing room all while obtaining meaningful employment and a successful career,” Wolf was quoted in a statement. “I applaud President Biden for supporting hard-working student loan borrowers who are shouldering astronomical student debt by providing much-needed relief.
He added: “My administration does not intend to burden these Pennsylvanians with a tax bill following this beneficial action.
“Therefore, that relief will not be considered taxable income in Pennsylvania.”
Student loan forgiveness is not considered taxable income at the federal level, Wolf said.
Bloomberg News has reported that 13 states, including Pennsylvania, have laws that treat forgiven debts as income, meaning that it’s subject to state levies on earnings.
The report noted that some of those states could revise their rules before the taxes are due next spring.
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