The Senate version of the $ 1.9 trillion COVID-19 relief program, which cleared the chamber on Saturday, has been amended to remove taxes on canceled student debt until 2025, reports the Wall Street Journal.
Why is this important: The provision, which was included by Democrats this week, paves the way for President Biden to cancel student debt through executive action – one of his campaign pledges – without burdening thousands of Americans with ‘a new tax.
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Federal law generally treats canceled debt as taxable income. Biden’s pledge to write off up to $ 10,000 in debt per individual would have increased “many households’ tax bills by more than the monthly payments they would have paid on debt for that year former Obama administration official Adam Looney told the Journal. .
Where is it: The House is now expected to pass the bill allowing President Biden to sign it.
The government will lose some $ 44 million in revenue because of this provision, writes the WSJ, citing the Congressional Joint Committee on Taxation.
Details: All federal student loans are eligible, including state student loans, institutional loans, private student loans, and private parent loans.
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