The Wall Street Journal reports that the Senate version of the $ 1.9 billion COVID-19 assistance package, which cleared the room on Saturday, has been amended to remove taxes on forgiven student loans until 2025.
Why it matters: The bill, adopted by Democrats this week, paves the way for President Biden to forgive student debt through executive action – one of his promises in the campaign – without taxing thousands of Americans.
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Federal law usually treats forgiven debts as taxable income. Biden’s promise to forgive up to $ 10,000 in debt per individual would ‘increase the tax bills of many households by a larger amount than the monthly installments they would have paid for that year’, says Adam Looney, a former official of the Obama administration. .
Where it says: The House is now expected to pass the bill that President Biden will sign.
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The government will lose about $ 44 million in revenue from the provision, WSJ writes, referring to the Congressional Joint Committee on Taxation.
Details: All federal student loans are eligible, including government education loans, institutional loans, private student loans and private parent loans.
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