The Senate version of the $ 1.9 trillion COVID-19 aid package, which approved the chamber on Saturday, has been amended to eliminate taxes on debts borrowed from forgiven students by 2025, the Wall Street Journal reports.
Why does it matter: The provision, which was included by Democrats this week, paves the way for President Biden to forgive student debt through executive action – one of his campaign promises – without burdening thousands of Americans with a new fee.
- Federal law usually treats forgiven debts as taxable income. Biden’s commitment to forgive up to $ 10,000 in personal debt would have increased “the tax bills of many households by more than the monthly payments they would have paid for that year’s debt,” he told the newspaper. former Obama administration official Adam Looney. .
Where is it: Parliament is now expected to pass the bill for President Biden to sign into law.
- The government will lose about $ 44 million in revenue due to the provision, the WSJ writes, citing the congressional Joint Committee on Taxation.
Details: All federal student loans are eligible, including state education loans, institutional loans, private student loans, and private parent loans.