It looks like quite a few young folk who were all excited about student loan forgiveness and cheered like mad for the proposal when it was announced by President Joe Biden might be in for a really nasty surprise come April 15 of next year, especially if they thought this was going to be a tax-free windfall. But this all depends on where they live.
A recent report from the Western Journal noted that “The American Rescue Plan ensures that no federal tax liability accrues for any loan forgiveness between 2021 and 2025. The same is not true of all states, or of counties that have an income tax, according to CNBC. That could trigger an issue for former students who are getting out of paying back up to either $10,000 or $20,000 in student loans.”
“The Tax Foundation offered a list of seven states that are likely places where the loan forgiveness could be treated as taxable income. It initially estimated 13 states might tax the loan forgiveness as revenue,” the WJ said.
So which states are on the list? Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina and Wisconsin. So if you’re a person who was all kinds of happy and celebrating this program, which shifts the cost of your education over to other people who already have to worry about sending their own kids to college and making ends meet, you’re about to get your first real taste of how much the IRS sucks.
“California state Assembly Speaker Anthony Rendon and Senate President Pro Tem Toni Atkins recently vowed that California would pass legislation to waive state taxes on the loan forgiveness in 2023,” the report said.
“Once the federal government finalizes details of the student debt relief program, we will know whether the relief is tax exempt under current California law,” Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon remarked in a joint statement pushed out on Sept. 9, according to a piece from the Longview News-Journal. “If not, we will make the relief tax exempt through immediate action in early 2023. Rest assured, one way or another, California will not tax the federal student debt relief.”
CNBC stated that as of now, residents calling Indiana home would owe a state tax, and possibly one for the county too. Uncle Sam always wants to keep a cut of anything and everything that comes into a person’s hand that they can label “income.” We all know that by now.
“As this law is clearly defined, there is no need for additional administrative rules,” a representative of Indiana’s Department of Revenue went on to say during an interview with CNBC. “Any legislative change must come from the General Assembly.”
A representative of the Arkansas Department of Finance and Administration, Scott Hardin, spoke with CNBC and commented that the tax question will not likely be settled until the state legislature comes back in January.
“It would be inaccurate to report student loan forgiveness will be taxable in Arkansas as we won’t be certain until the legislative session is complete,” he explained.
So, once again, the wool has been pulled over the eyes of the loyal statists across the United States who somehow thought the government was going to strip away their student loan debt without taking a little something for themselves. Rule number one of being an adult is there’s no such thing as a free lunch.
Other people’s money is paying for your college education. The government is now taking that money and pocketing some of it. Who did you really think was going to benefit from all of this madness?