People in line to benefit from President Biden’s plan to cancel up to $20,000 in student loans could be taxed on the one-time relief depending on where they live.
— the degree to which a state’s tax code matches the federal one. Some states conform to the entire federal tax code, while others adopt portions as they see fit.Tax agencies in a number of states can make changes on their own. But in others, the legislature must act, said Eileen Sherr, director for tax policy and advocacy at the American Institute of Certified Public Accountants.
Similarly, Wisconsin residents who benefit from the one-time student loan relief will have to pay taxes on the canceled debt unless the legislature updates the policy, according to the Wisconsin Department of Revenue. The agency said lawmakers could take up the issue when they are back in session in January.The same is true in Arkansas, where tax officials say they are also awaiting legislative action.
about whether to treat the debt as income, according to a spokesperson for the state’s tax division who noted that the federal agency has yet to confirm that Biden’s cancellation plan lines up with other forgiveness programs excluded from income under the stimulus provision.
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