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Bill

LC 3973

Provide income tax exemption for forgiven student debt

2025 Regular Session

Exempts forgiven student debt from state income tax, shielding borrowers from tax on debt forgiveness.

(LC) Draft Died in Process
#revenue #state #taxation--individualincome #taxation
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Bill Summary · LC 3973

Summary of LC 3973: Provide income tax exemption for forgiven student debt

Basic information

  • Bill number: LC 3973
  • Title: Provide income tax exemption for forgiven student debt
  • Status: Draft Died in Process (LC)
  • Introduced: December 15, 2024
  • Classification/Subject: Revenue and Taxation – Individual Income

Purpose and intent

  • The bill’s stated objective is to create an income tax exemption at the state level for amounts of student debt that are forgiven. In other words, it would exclude forgiven student loans from being taxed as income under the state income tax.

Key provisions (as available)

  • The text of the bill is not provided in the materials available here, so the specific statutory language, definitions, and operational details are not known. Based on the title, the bill would likely:
    • Define what counts as “forgiven student debt.”
    • Establish the exemption amount (e.g., whether there is a cap or automatic full exemption).
    • Specify the tax year for which forgiveness must occur to qualify.
    • Address administrative aspects (filing requirements, required forms, conformity with federal tax treatment, etc.).
    • Include effective dates, potential sunset provisions, and interaction with other state tax provisions or credits.
  • Because the exact text isn’t included, the above are anticipated elements rather than confirmed provisions.

Affected parties and impact

  • Primary beneficiaries: Individual taxpayers who have student loan debt that is forgiven (e.g., through loan forgiveness programs, settlements, discharge, or other forgiveness events).
  • Broader effects: State revenue implications depend on the size of forgiven debt and the breadth of the exemption. Local universities, lenders, and tax preparers could experience changes in filing practices and administration.

Procedural history and timeline

  • 2024-12-15: Drafter Assigned (initial drafting stage).
  • 2025-03-20: Draft On Hold (listed multiple times on this date).
  • 2025-05-22: Draft Died in Process (bill did not advance in this session).
  • The bill has not progressed beyond the drafting/holding stages in the information provided and is officially noted as having died in process.

Practical considerations

  • If reintroduced, key questions would include: the exact exemption mechanics, any caps or phase-ins, interaction with federal tax treatment and conformity, and the anticipated revenue impact on the state budget.
  • As the bill is currently marked as “Died in Process,” it would need to be reintroduced and move through committee and floor actions in a future legislative session to become law.

Note

  • This summary reflects information available from the bill’s metadata and title. The full provisions and precise language are not provided here. For a detailed understanding, review the actual bill text when it becomes available.

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

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