Gov. Cooper wants loan forgiveness exempt from state tax
North Carolina Gov. Roy Cooper wants the General Assembly to pass legislation exempting individuals from state income tax on the student loan forgiveness announced by President Joe Biden last month.
The White House has said the value of that forgiveness — up to $20,000 for some — is exempt from federal income tax, citing language in the 2021 American Rescue Plan law. But North Carolina appears to be one of a half-dozen states where amounts would be subject to state tax without a change.
The Democratic governor pointed out that the General Assembly passed legislation in 2021 that exempted loans from the Paycheck Protection Program for businesses from state income tax and allowed recipients to deduct expenses paid with those loans.
“Republican legislators were quick to help businesses and should now fix this fundamental unfairness for many hardworking people who will get hit hard by this,” Cooper said in a Wednesday news release. North Carolina’s individual income tax rate of 4.99% falls to 4.75% in 2023.
The General Assembly’s primary work period for the year ended July 1. Lawmakers have held monthly three-day administrative floor sessions since then. The next such meeting is next week. Lawmakers have authority to consider substantive legislation during these sessions.