WeVote
Log In

Bill

WeVote Research Nonpartisan
Bill Summary · HB 1361

Legislative bill overview

HB 1361 would exclude discharged student loans from being counted as income for Indiana tax purposes. This means when a borrower's student loan debt is forgiven or discharged (such as through public service loan forgiveness, income-driven repayment plan forgiveness, or bankruptcy), that forgiven amount would not trigger state income tax liability in Indiana.

Why is this important

Federal student loan forgiveness programs can create unexpected tax bills for borrowers when the forgiven debt is treated as taxable income. By excluding discharged student loans from Indiana's taxable income definition, the bill would prevent state tax liability on forgiveness events, making loan forgiveness programs more financially beneficial for borrowers and reducing a hidden cost of debt relief.

Potential points of contention

  • Revenue impact: The state would lose tax revenue from individuals who receive student loan forgiveness, requiring budget adjustments or offsets elsewhere
  • Scope ambiguity: The bill's current language may need clarification on which types of loan discharges qualify (federal vs. private loans, voluntary vs. involuntary discharge scenarios)
  • Fairness questions: Some argue that excluding forgiven debt from income creates unequal tax treatment compared to other forms of financial relief or income, potentially benefiting higher-education borrowers over other taxpayers

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

Sign in to ask a question.