California Law Exempts Forgiven Student Loan Debt From State Tax

California Gov. Gavin Newsom (D) signed a bill Monday exempting forgiven student loan debt and other pandemic-related financial relief for students from state income tax.

The governor’s signature on the bill (A.B. 111) solidifies California’s tax treatment of forgiven student debt under President Joe Biden’s plan to offer debt relief to certain borrowers based on their income.

• The US Supreme Court cast doubt on Biden’s plan during oral arguments in February but hasn’t issued a ruling yet in the court challenge.
• The bill clarifies that the California income tax exclusion applies to forgiven student loans, ...