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Illinois measure would give income tax exemption for student loans “forgiveness” | Illinois

(The Center Square) – Illinois state senators are seeking an income tax exemption for student loan forgiveness, among other tax code changes.

The legislature was in Springfield for two days the week before Thanksgiving. They are back for three days next week to end the year. An invoice in the queue contains changes. State Senator Celina Villanueva told a Senate committee earlier this month it had four components.

“The first is an income tax exemption for student loan forgiveness,” she said. “This is to ensure that Illinois income taxpayers who are exempt from or in receipt of student loan forgiveness are exempt if the federal government does not exempt those federal income taxes for that loan origination.”

The government loan forgiveness program passed by Congress and enacted years ago by former President George W. Bush has canceled some debt.

“Amounts waived under the PSLF program are not considered income by the Internal Revenue Service,” the program’s website states. “Therefore, you don’t have to pay federal income tax on the amount of your forgiven direct loans.”

Regardless, President Joe Biden’s executive order for a $10,000-$20,000 loan forgiveness is bound in court. Biden on Tuesday announced an extension to the student loan repayment freeze initiated by former President Donald Trump during the COVID-19 pandemic. That won’t be overturned now until the case challenging Biden’s order is settled in court.

“It’s not fair to ask tens of millions of borrowers who are eligible for relief to resume their student debt payments while the courts review the lawsuit,” Biden said in a Twitter video.

Villanueva’s bill at the Illinois Statehouse also allows people with disabilities to be exempt from Illinois income taxes for up to $10,000 in contributions to savings accounts to achieve a better life experience.

Another provision provides a $2 million tax credit for touring Broadway productions.

“As a musical lover, this is a good thing because who doesn’t love ‘Wicked’ or ‘Hamilton’ or any of the other wonderful shows that are touring our state,” she said.

Also included in their bill, Cook County taxpayers will get an extra month to pay property taxes with no accrued interest.

State lawmakers are back for three days this week. The measure is pending final passage in the Senate before the House of Representatives can approve it and then refer it to the governor.

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