New York lawmakers on Thursday introduced legislation that would formally exempt federal student debt relief from state taxes.
The bill, backed by Deputy Senate Majority Leader Mike Gianaris, state Sen. Brad Hoylman and state Sen. Kevin Thomas, would codify the policy set by the state Department of Taxation and Finance to not count as income the debt relief following a plan announced last month by President Joe Biden.
“Relieving student debt is critical for so many across New York. It should not turn into a cash grab by the state," Gianaris said. "This is an important step in making it easier to access the higher education and career training New Yorkers need and deserve.”
Three states have signaled plans to tax the debt forgiveness for borrowers. New York tax officials have said they would not, but lawmakers signaled their bill is more than symoblic.
"Codifying exemptions that clarify forgiven loans are not subject to state taxes prevents confusion and will protect eligible borrowers from being penalized for receiving this needed - and important relief from the U.S. Department of Education," Thomas said.
Biden's plan would forgive debts for up to $20,000 in Pell grants and $10,000 in non-Pell loans for borrowers who earn less than $125,000.
A Siena College poll released this week found a majority of New York support Biden's proposal. Some lawmakers are also calling for tax exemptions in New York for student debt payments of up to $5,000.