MYRTLE BEACH, SC (WBTW) – South Carolina will not impose tax-exempt student loan debt, according to the South Carolina Department of Revenue.
In a Tweeter, the SCDOR said the General Assembly passed IRC Section 108(f)(5) in the 2022 legislative session, which excludes student loan forgiveness from being considered taxable income. Section 108(f)(5) of the IRC was amended by the American Rescue Plan Act and suspended federal taxes on student loan forgiveness until 2025.
“To the extent that a student loan described in IRC Section 108(f)(5) is canceled for federal income tax purposes and excluded from federal taxable income, the amount is also excluded from Carolina taxable income. South,” SCDOR said in a tweet.
In Mississippi, Minnesota, Wisconsin, Arkansas, and North Carolina, canceled student loans will be subject to state income tax unless they change their laws to comply with a federal tax exemption for student loans, according to a tally by the Tax Foundation, a Washington, DC-based think tank.
Spokespersons for tax agencies in several states — including Virginia, Idaho, New York, West Virginia, Pennsylvania and Kentucky — told The Associated Press that their states will not tax student loans. canceled as part of the Biden program. Tax officials in a few other states said they needed to do more research to find out.
The Associated Press contributed to this report.
Suggest a fix