04/16/2024

Mississippi intends to tax as income those residents who have their student loan debt forgiven, becoming the first state to declare that it plans to make such a move, Bloomberg has reported.

Although the student loan forgiveness plan is exempt from federal tax, an analysis by the Tax Foundation says it may still be subject to some individual state taxes.

In contrast, New York, Virginia, and Pennsylvania have already introduced tax exemptions for residents who qualify for the debt forgiveness, according to Bloomberg.

However, other states — including Arkansas and Wisconsin — are also considering taxing forgiven student loan debt.

Arkansas’ Department of Finance and Administration told Bloomberg that it was “reviewing whether debt forgiveness in this scenario, via executive order, is subject to state income tax,” saying it would decide on the matter in the next few days.

Meanwhile, the Wisconsin Department of Revenue told Bloomberg that it would deal with the topic in its upcoming biennial budget.

The Biden administration’s student loan debt forgiveness plan includes forgiving up to $10,000 in loans for those earning $125,000 or less as an individual or $250,000 or less as a household, and $10,000 more for borrowers from low-income backgrounds who received Pell Grants in college, The New York Times reported.