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L
lisayanders
March 14, 2024
Question

I was wondering if Arizona was one of the few states were people didn't have to pay taxes on forgiven student loans?

  • March 14, 2024
  • 1 reply
  • 0 views
I was part of the Borrower's Defense Case Under Exhibit C of the Sweet v. Cardona Settlement. Do I have to pay taxes in the state of Arizona?

1 reply

DMarkM1
DMarkM1
March 14, 2024

No.  AZ does not have an addition to income for "Discharged Student Loan Debt" .  The tax code Section 108(f)(5) states student loan debt discharged after December 31, 2020 and before January 1,2026 is not taxable at the federal level. Therefore it is not included in federal taxable income that transfers to AZ state returns. 

 

Further, here is an IRS ruling on "Borrower Defense" loan discharges making Borrower Defense discharges non-taxable at the federal level as well.  

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