Virginia gained’t tax forgiven pupil loans, regardless of information experiences
Printed 6:53 pm Tuesday, August 30, 2022
By Sarah Vogelsong
Virginia Mercury
Virginia is not going to tax as revenue pupil loans forgiven beneath a brand new plan introduced by President Joe Biden final week, based on representatives of two state businesses.
“The quantity of pupil mortgage debt that was forgiven will likely be disregarded of federal adjusted gross revenue, and, by extension, Virginia taxable revenue, with none additional motion by the Normal Meeting,” wrote Stephen Kindermann, a finance legal professional within the Virginia Division of Legislative Companies, in response to an inquiry from Del. Marcus Simon, D-Fairfax.
Heather Cooper, a spokeswoman for Virginia Division of Taxation, additionally stated in an e-mail that “to the extent that pupil loans forgiven via the just lately introduced pupil mortgage forgiveness program are exempt from federal taxation … they might not be taxable on the Virginia revenue tax return.”
A number of nationwide information experiences have listed Virginia as one in all roughly a dozen states the place residents who’ve some or all of their pupil loans forgiven beneath the brand new coverage might nonetheless be topic to state taxation of the forgiven loans.
However Virginia in 2022 conformed a part of its tax code to a provision of the American Rescue Plan Act that excluded pupil loans which have been forgiven from being taxed as gross revenue via 2025.
Simon stated confusion was doubtless linked to Virginia’s choice to not conform its state tax code with all facets of the federal tax code.
Nevertheless, he stated that not solely had the state adopted the federal authorities on the mortgage forgiveness exemption, however fiscal affect estimates had accounted for the ensuing lack of state revenues.
Beneath the coverage introduced by Biden Wednesday, as much as $20,000 in federal pupil mortgage debt will likely be canceled for Pell Grant debtors, and as much as $10,000 will likely be canceled for all different debtors whose revenue is lower than $125,000 for a person and $250,000 for a family.
Reprinted courtesy of Virginia Mercury.
