Student loan forgiveness to become tax-free in Michigan
LANSING, Mich. (WNDU) - Gov. Gretchen Whitmer said student loan relief will not be treated as taxable income in her state on Wednesday.
1.4 million Michigan residents, eligible for relief, will not owe any state taxes for receiving benefits of the public service loan forgiveness program, or other similar ones.
“The decision to cancel $10,000 in student loan debt and $20,000 for Pell Grant recipients will make a real difference for 1.4 million Michiganders that have student loans, putting money back in their pockets,” said Governor Whitmer. “Nearly 700,000 Michiganders will have their debt cut in half or eliminated entirely, lifting a huge burden off their backs. People can use these savings to buy a home, start a business, get married, or start a family. I will work with anyone to keep lowering the cost of higher education and offering more paths for Michiganders to earn a higher education tuition-free, without going into debt in the first place.”
The lieutenant governor discussed the announcement as well.
“We also recognize this loan forgiveness is an accelerate program, resource to be invested in people,” said Lt. Gov. Garlin Glichrist II.
Typically when debt is forgiven, the IRS treats it as taxable income. But provisions of the American Rescue Plan have temporarily lifted the requirement.
Any federal loans that are discharged between last year and 2025 will not be considered taxable income by the federal government.
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