Rich Pedronseri/AP/Shutterstock / Rich Pedronseri/AP/Shutterstock
California Governor Gavin Newsom recently announced through a press release on November 5th a proposal to ensure that Californians get their benefits. Waiver of federal student loans. You do not have to pay state tax on amounts exempted under President Joe Biden’s ProgramAccording to a press release, the proposal could save California borrowers up to $1.3 billion in expected taxes and will be part of the governor’s budget to be announced in January.
look: 22 side jobs that can make you richer than a full-time job
Student Loan Forgiveness: Mark these 4 dates on your calendar now
“California residents who are exempt from student debt should not be subject to taxes.This will result in tax relief of up to $1.3 billion for more than 3.5 million Californians,” Newsom said in a release. is described. “We look forward to working closely with Congress to make this happen through early action.”
Biden’s plan could offer up to $10,000 in federal student debt relief to borrowers with incomes below $125,000 ($250,000 for households) in 2020 or 2021. This figure could top Pell’s $20,000 in student loan cancellations for her grant recipients. For dependent students, eligibility is based on parental income. Most federal loans are eligible — Direct Undergraduate and Graduate Loans, Parent PLUS and Graduate PLUS Loans, Consolidated Loans, Federal Family Education Loan (FFEL) Program Loans held by the Department of Education, Perkins Loans held by the same department, and Debt Includes defaulted loans. , according to studentaid.gov.
California has approximately 3,550,000 eligible borrowers, of which an estimated 2,340,600 are Pell Grant borrowers, according to the release. By waiving state tax on forgiven student loan debt, borrowers can save hundreds of dollars (on average) individually and up to $1,860 per release.
Business Insider reports that other states are taking the opposite approach, as Mississippi and Indiana have already confirmed that debt relief is taxable.
Indiana borrowers will have to pay $323 in state taxes for a $10,000 student loan forgiveness and $646 for a $20,000 student loan forgiveness, according to the Indiana Department of Revenue.
Please answer the questionnaire: Do you think student loan debt should be forgiven?
more: What is the highest income from food stamps in 2022?
On Nov. 5, the White House said 26 million people have provided the Department of Education with the information it needs to consider debt relief, and 16 million applications have been approved to date.
Learn more about GOBankingRates