Higher Education Leader says he will introduce emergency legislation to end ambiguity
SACRAMENTO – Sen. Steve Glazer (D-Contra Costa) called Friday for Gov. Gavin Newsom and legislative leaders to ensure that Californians who qualify for federal student loan forgiveness do not have to pay state income taxes on their forgiven debt.
Glazer, a former California State University trustee who is chairman of the Senate Select Committee on Student Success, said he plans to introduce urgency legislation on the first day of the new legislative session in December to exempt the forgiven debts from state taxes.
“Most people who will have their debts forgiven are low income and many have struggled for decades to make their monthly payments,” Glazer said. “The last thing they need to worry about is having to pay taxes on the amount that’s forgiven.”
Current federal law exempts forgiven student loans from federal income taxes. But experts say the forgiven loans may be counted as income and taxed in California, depending on how the federal program is implemented. The state Franchise Tax Board, which administers the income tax, says it isn’t sure yet whether state taxes will apply.
Glazer praised Newsom, Senate President Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon for their leadership in keeping college costs down and boosting state financial aid in recent years. Making sure that debt forgiveness is tax-exempt would be consistent with those policies, he said.
“I am confident that the governor and the legislative leaders will do whatever is necessary to make it clear that Californians won’t be saddled with these costs,” Glazer said. “If action is necessary, we need to take it as quickly as possible so that any uncertainty is resolved before people pay their taxes next spring.”