Bill Text: NJ AR64 | 2020-2021 | Regular Session | Introduced
Bill Title: Urges Congress to amend tax code to exclude all forms of discharged student loans from federal income tax.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Introduced - Dead) 2020-01-14 - Introduced, Referred to Assembly Higher Education Committee [AR64 Detail]
Download: New_Jersey-2020-AR64-Introduced.html
STATE OF NEW JERSEY
219th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2020 SESSION
Sponsored by:
Assemblywoman BRITNEE N. TIMBERLAKE
District 34 (Essex and Passaic)
Assemblyman RALPH R. CAPUTO
District 28 (Essex)
Assemblyman THOMAS P. GIBLIN
District 34 (Essex and Passaic)
Co-Sponsored by:
Assemblywomen Tucker and Jasey
SYNOPSIS
Urges Congress to amend tax code to exclude all forms of discharged student loans from federal income tax.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Assembly Resolution urging Congress to amend the tax code to exclude all forms of discharged student loans from federal income tax.
Whereas, Under federal law, income from discharge of indebtedness is subject to the income tax unless there is a specified exception in the law; and
Whereas, Discharged student loans are not subject to the income tax if, for example, they are forgiven through a provision of the loan that allows forgiveness when the borrower works for certain employers in particular professions for a designated period of time; and
Whereas, Teachers and other public service employees meeting the requirements can qualify for such forgiveness through the Teacher Loan Forgiveness and Public Service Loan Forgiveness programs; and
Whereas, As part of the "Tax Cuts and Jobs Act," Pub.L.115-97, Congress also excluded from the income tax discharge of student loans on account of death or disability if the discharge occurs after December 31, 2017 and before January 1, 2026; and
Whereas, Student loans discharged for certain other reasons, as the forgiveness of loans in Income-Driven Repayment-Plans after the 20 or 25 year repayment period, are still subject to federal income taxation; and
Whereas, Because not all forms of discharged student loans are excluded from the federal income tax, there are borrowers who have their student loans forgiven, but as a result have to pay the federal income tax on the amount forgiven; and
Whereas, Discharge of student loans would be far more helpful to those in greatest need of discharge if the borrower did not have to pay the income tax on the amount discharged; and
Whereas, It is fitting and proper for this House to urge Congress to reassess the circumstances under which discharged student loans are subject to the federal income tax and to permanently exclude the discharge of student debt on account of death or disability from the income tax; now, therefore,
Be It Resolved by the General Assembly of the State of New Jersey:
1. This House urges Congress to exclude all forms of discharged student loans from federal income taxation.
2 Copies of this
resolution, as filed with the Secretary of State, shall be transmitted by the
Clerk of the General Assembly to each member of Congress representing New
Jersey, the Secretary of the United States Treasury, and the Commissioner of
Internal Revenue.
STATEMENT
This resolution urges Congress to exclude all forms of discharged student loans from the federal income tax. Federal law requires payment of the income tax on forgiven debt except in certain circumstances. For example, student loans forgiven for teachers and public service employees eligible for Teacher Loan Forgiveness and Public Service Loan Forgiveness programs are not subject to the income tax.
Discharge of student debt on account of death or disability is also not subject to the income tax but only if the debt is discharged between December 31, 2017 and January 1, 2026. Other forms of discharged student debt, such as the forgiveness of loans in Income-Driven Repayment-Plans after the 20 or 25 year repayment period, are subject to federal income taxation. This House therefore urges Congress to make the discharge of student debt on account of death or disability exception to the income tax a permanent part of the tax code, and to permanently exclude from the income tax all other forms of discharged student loans.
