Urges Congress to amend tax code to permanently exclude all forms of discharged student loans from federal income tax.
Impact
If implemented, AR95 would facilitate a significant change in federal tax legislation that directly affects student loan borrowers. By exempting discharged student loans from federal income tax, the resolution aims to provide immediate financial relief to individuals who are struggling with repayment, particularly in the aftermath of economic strains heightened by the COVID-19 pandemic. Without this exemption, borrowers could face substantial tax liabilities that would counteract the assistance provided by loan forgiveness programs.
Summary
Assembly Resolution No. 95 (AR95) urges Congress to amend the federal tax code to permanently exclude all forms of discharged student loans from federal income tax. The resolution highlights the current tax implications concerning discharged student debt and advocates for changes to alleviate potential financial burdens on borrowers whose loans are forgiven. It emphasizes how student loan forgiveness should not lead to a tax liability, especially for those already facing significant financial challenges.
Sentiment
The sentiment surrounding AR95 appears to be generally supportive among its sponsors and advocates, as they express the necessity of enhancing relief for borrowers. They argue that the financial pressures resulting from tax implications on discharged loans are detrimental to those who need relief the most. The dialogue suggests a recognition of the broader economic impacts on individuals, particularly in the context of past federal relief measures that have temporarily suspended such tax obligations.
Contention
While there is a strong push for supporting AR95, potential contention lies in the budget implications of such a change in tax policy. Critics may raise concerns about the long-term effects on federal revenue and whether this resolution could set a precedent for additional financial burdens on the national budget. Hence, the debate may center on balancing the need for borrower relief against fiscal responsibility at the federal level.
Income tax; exclude forgiven, cancelled or discharged federal student loan debt under the Public Service Loan Forgiveness Program from the definition of "gross income".
Income tax; exclude forgiven, cancelled or discharged federal student loan debt under the Public Service Loan Forgiveness Program from the definition of "gross income".