NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A8874
SPONSOR: Reyes
 
TITLE OF BILL:
An act to amend the tax law, in relation to excluding certain student
loan discharge or forgiveness amounts from state income tax to the
extent such amount is included in federal adjusted gross income
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this legislation is to exclude any federal student loan
forgiveness awards authorized by the Secretary of Education from New
York adjusted gross income, further ensuring the effectiveness of Chap-
ter 750 of the Laws of 2023.
 
SUMMARY OF PROVISIONS:
Section 1 of the bill makes the following changes to Chapter 750 of the
Laws of 2023 (Approval Memo 72):
Remove provisions that would limit the state deduction of student loan
forgiveness to only four provisions of federal law; and
Removes language stating "irrespective of whether it is considered taxa-
ble income for federal tax purposes" which would have resulted in a
double deduction from New York state taxable income
Section 2 provides the effective date.
 
JUSTIFICATION:
The bill intends to alleviate the effects of rising student loan debt by
allowing New York State to ensure that beneficiaries of student loan
debt relief do not have to pay money out of their own pockets in the
form of tax liability on such forgiveness.
Although, the American Rescue Plan stipulated that student loan debt
would be classified as non-taxable income at the federal level, current
New York State tax laws limited relief to four statutes of federal law,
provided under 20 U.S.C. § 1098aa, 1098bb, 1098cc, 1098dd and 1098ee. In
June 2023, federal student loan forgiveness under these statues were
struck down by the Supreme Court.
This bill makes amendments to Chapter 750 of the Laws of 2023 to expand
provisions in state tax law to ensure that no state taxes would be owed
on any federal student loan debt forgiveness authorized by the Secretary
of Education.
 
PRIOR LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None to the State.
 
EFFECTIVE DATE:
This act shall take effect on the same date and in the same manner as a
Chapter of the Laws of 2023 amending the tax law to excluding certain
student loan discharge or forgiveness amounts from state income tax, as
proposed in legislative bill numbers S. 143 and A. 4421, takes effect.
STATE OF NEW YORK
________________________________________________________________________
8874
IN ASSEMBLY
January 25, 2024
___________
Introduced by M. of A. REYES -- read once and referred to the Committee
on Ways and Means
AN ACT to amend the tax law, in relation to excluding certain student
loan discharge or forgiveness amounts from state income tax to the
extent such amount is included in federal adjusted gross income
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 47 of subsection (c) of section 612 of the tax
2 law, as added by a chapter of the laws of 2023, amending the tax law
3 relating to excluding certain student loan discharge or forgiveness
4 amounts from state income tax, as proposed in legislative bills numbers
5 S. 143 and A. 4421, is amended to read as follows:
6 (47) [The] For taxable years beginning on or after January first, two
7 thousand twenty-three, the amount of any student loan discharged or
8 forgiven by the secretary of education pursuant to [authorization
9 provided by 20 U.S.C. § 1098aa, 1098bb, 1098cc, 1098dd or 1098ee shall
10 not be considered taxable income for the purpose of calculating New York
11 adjusted gross income, irrespective of whether it is considered taxable
12 income for federal income tax purposes] any federally authorized
13 program, to the extent included in federal adjusted gross income.
14 § 2. This act shall take effect on the same date and in the same
15 manner as a chapter of the laws of 2023, amending the tax law relating
16 to excluding certain student loan discharge or forgiveness amounts from
17 state income tax, as proposed in legislative bills numbers S. 143 and A.
18 4421, takes effect.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01849-02-4