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<strong>North</strong> <strong>Carolina</strong> says it will tax Biden's student-<strong>loan</strong><br />
forgiveness, and more states are likely to follow suit<br />
<strong>Student</strong> Loan Forgiveness Currently Considered Taxable Income in NC<br />
From NC Dept of Revenue - Aug 31, 2022<br />
The White House has indicated that President Biden’s recent student <strong>loan</strong> forgiveness<br />
will be excluded from federal income tax due to the student <strong>loan</strong> forgiveness exemption<br />
contained in IRC 108(f)(5). As part of the American Rescue Plan, Congress enacted<br />
Section 108(f)(5) of the Internal Revenue Code to expand the types of student <strong>loan</strong><br />
forgiveness that would not be treated as taxable income for purposes of federal income<br />
tax.<br />
The <strong>North</strong> <strong>Carolina</strong> General Assembly did not adopt Section 108(f)(5) of the IRC for<br />
purposes of the state income tax. Therefore, student <strong>loan</strong> forgiveness excluded<br />
pursuant to IRC 108(f)(5) is currently considered taxable income in <strong>North</strong> <strong>Carolina</strong>. See<br />
N.C. Stat. 105-153.5(c2)(22).<br />
The NC Department of Revenue is monitoring any further enactments by the General<br />
Assembly that could change the taxability of student <strong>loan</strong> forgiveness in <strong>North</strong> <strong>Carolina</strong>.<br />
So stay tuned…
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