When President Joe Biden announced that his administration would be forgiving up to $10,000 for student loan borrowers (and up to $20,000 for Pell Grant recipients), his statement included information about how the debt forgiveness would be taxed.
“Thanks to the American Rescue Plan, this debt relief will not be treated as taxable income for the federal income tax purposes,” the statement reads. It makes sense: this is money that never met the hands of its recipients.
But last week, North Carolina’s Department of Revenue issued its own statement regarding student loan forgiveness, informing borrowers that they would be required to pay state taxes on the income saved from student loan forgiveness. Based on the current highest tax percentage, North Carolinians could owe up to almost $500 to the state come tax season.
