Bill Text: NJ A5818 | 2018-2019 | Regular Session | Introduced
Bill Title: Exempts discharge of student loan debt of certain veterans through the federal Total and Permanent Disability discharge process from taxation under the gross income tax.
Spectrum: Slight Partisan Bill (Democrat 11-5)
Status: (Engrossed - Dead) 2020-01-13 - Passed by the Assembly (76-0-0) [A5818 Detail]
Download: New_Jersey-2018-A5818-Introduced.html
Sponsored by:
Assemblyman ANTHONY S. VERRELLI
District 15 (Hunterdon and Mercer)
Assemblyman BENJIE E. WIMBERLY
District 35 (Bergen and Passaic)
SYNOPSIS
Exempts discharge of student loan debt of certain veterans through the federal Total and Permanent Disability discharge process from taxation under the gross income tax.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the gross income tax treatment of certain discharged student loan indebtedness of disabled veterans and supplementing chapter 6 of Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Gross income shall not include amounts discharged through the Total and Permanent Disability discharge process of the United States Department of Education for student loan indebtedness of a taxpayer who is a totally and permanently disabled veteran. As used herein, "totally and permanently disabled veteran" means an individual who has been determined by the United States Department of Veterans Affairs to have a service-connected disability that is 100 percent disabling or to be totally disabled based on an individual unemployability rating.
2. This act shall take effect immediately.
STATEMENT
This bill codifies the current New Jersey gross income tax treatment of a specific type of cancellation of debt. Under current law, discharge of indebtedness is not subject to New Jersey gross income tax and is not reportable by the taxpayer.
This bill would codify that treatment as it applies specifically to certain federal student loan indebtedness of a disabled veteran who has had that debt discharged through the Total and Permanent Disability discharge program of the U.S. Department of Education. Cancellation of debt, including amounts discharged through the federal Total and Permanent Disability discharge program, is not currently subject to New Jersey gross income tax.
Total and Permanent Disability discharge relieves individuals who can demonstrate that they are totally and permanently disabled from having to repay certain federal student loans or comply with certain teaching obligations associated with certain federal grants.
