Forgiven student loan debt won’t be taxable income
The Michigan Treasury Department says student loans that are forgiven under a federal program won’t be taxed as income.
Typically, forgiven loans are treated as income under state and federal tax laws. So that would potentially add thousands of dollars in taxable earning for people who take advantage of the program. But the federal law makes forgiven student loans exempt. So they’re also exempt from Michigan income taxes, which are based on federal taxable income.
Lieutenant Governor Garlin Gilchrist says that makes student loan forgiveness a better deal.
“And what we’re saying is when you apply for it and you get it, it will be tax free and that’s available today.” said Gilchrist.
Gilchrist says there’s an estimated 1-point-4 million Michiganders eligible to apply student loan debt relief.