By MADISON HIRNEISEN
THE CENTER SQUARE
(The Center Square) – Two California lawmakers have plans to introduce legislation when the Legislature convenes Monday to exempt the Biden administration’s federal student loan forgiveness from state income tax, a measure supported by state Democratic leadership.
The bill, authored by Senators Steve Glazer, D-Contra Costa, and Josh Newsom, D-Fullerton, would take effect immediately if approved by two-thirds of the Legislature and signed by Gov. Gavin Newsom, according to a press release.
“Many people have struggled for decades to make their monthly payments on their student loans, so the federal plan for forgiven debts is a welcome relief,” Sen. Glazer said in a statement. “But, it is plain unfair – and yet another hardship – for them to have to pay income taxes on that forgiven portion of their student debt.”
The student loan forgiveness program, which provides up to $20,000 to qualified borrowers, is currently being blocked by lower courts. On Thursday, the Supreme Court agreed to hear oral arguments in the case in February 2023.
In total, the Biden administration estimated more than 40 million borrowers qualify for the student debt relief program. Around 3.5 million California borrowers are eligible for the relief, including more than 2.3 million Pell Grant borrowers, according to the White House.
In September, Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon promised to take “immediate action” to ensure California did not tax the federal student debt relief. Gov. Newsom reiterated that sentiment in November, calling on lawmakers to take early action to exempt the debt forgiveness from state tax. Newsom said the measure will be included in his January proposal.
Sen. Glazer said he is introducing his bill on Monday as an urgency measure “because we need this to be resolved before people pay their taxes next spring.”
