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HB 5112

AN ACT EXEMPTING FROM THE PERSONAL INCOME TAX THE AMOUNT OF STATE AND FEDERAL DEBT RELIEF RECEIVED BY A TAXPAYER FOR STUDENT LOANS AND MEDICAL DEBT.

2026 Regular Session Introduced by Jason Rojas

Connecticut would exempt state and federal student loan and medical debt forgiveness from income tax, saving eligible taxpayers taxes but reducing state revenue.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#incometaxpersonalexemptions(state) #medicalexpenses #studentloans
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Bill Summary · HB 5112

Legislative bill overview

HB 5112 would exempt state and federal debt relief received for student loans and medical debt from Connecticut's personal income tax. This means taxpayers who receive forgiveness or cancellation of these debts would not have to pay state income tax on the relief amount. The bill applies to both state-administered and federally-administered debt relief programs.

Why is this important

Debt relief—particularly from federal student loan forgiveness programs—has created unexpected tax liabilities for recipients in states that tax such relief as income. This bill would prevent Connecticut residents from facing additional tax burdens when receiving debt forgiveness, potentially saving eligible taxpayers significant amounts. It could make debt relief programs more financially beneficial and reduce barriers to accessing available assistance.

Potential points of contention

  • Revenue impact: The state would lose tax revenue from exempting these relief amounts; fiscal analysis would determine the cost and whether it's sustainable
  • Equity concerns: Benefits would primarily help higher-income borrowers (who have more debt to forgive) and those with medical debt, potentially widening disparities for lower-income residents without student/medical debt
  • Scope limitations: The bill only covers two debt types; critics might question why other consumer debt relief isn't included, or supporters might argue it should be broader
  • Federal coordination: Uncertainty about which programs qualify and how state-federal interaction works could create administrative complexity

Compiled from official sources — confirm details with the bill’s official record.

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