Last week, North Carolina Gov. Roy Cooper asked the state’s General Assembly to waive state income taxes on federal student loan forgiveness. If approved, this measure would be a game changer for a lot of indebted taxpayers whose loan burden doesn’t seem to go away after years of paying never-ending interest.
President Biden recently announced that his administration will forgive up to $10,000 in student loan debt for eligible people. The loans will not be taxed at the federal level, but it’s up to the states to decide whether or not to levy the tax at the state level. In North Carolina, the current income tax rate is 4.99% and will drop to 4.75% next year.
If adopted, this measure would not be unprecedented, as the legislature previously waived taxes on the federal Paycheck Protection Program. The legislature also voted in 2021 to allow companies to deduct expenses paid with the loans obtained through that program, which saved businesses an estimated $600 million.
It is time for the Republican-led N.C. General Assembly to take measures that not only benefit businesses and corporations, but also the people. In Cooper’s own words, “Republican legislators were quick to help businesses and should now fix this fundamental unfairness for many hardworking people who will get hit hard by this.”
Although it is not yet clear how many people in North Carolina will benefit from loan forgiveness. But waiving state taxes on loan forgiveness would mean a savings of $499 to $998, a considerable help for some of the people who need it the most.