SACRAMENTO – After the California Franchise Tax Board made clear it plans to tax forgiven federal student loans today, Sen. Steve Glazer (D-Contra Costa) reiterated his plans to introduce urgency legislation on the first day of the new legislative session in December to exempt the forgiven debts from state taxes. 

Current federal law exempts forgiven student loans from federal income taxes. But on Wednesday, the California Franchise Tax Board confirmed that the forgiven loans would be counted as income and taxed in California.

“The federal debt relief is targeted at low-income former students,” Glazer said. “The last thing California should do is saddle people who qualify for relief with an unexpected tax bill from the state.”

 Glazer, a former California State University trustee who is chairman of the Senate Select Committee on Student  Success, praised Newsom, Senate President Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon for their leadership in keeping college costs down and boosting state financial aid in recent years. He said he was encouraged that the leadership has pledged to make the debt forgiveness tax-exempt.
 
“I will do whatever is necessary to support the governor and the legislative leaders in ensuring that Californians won’t be saddled with any taxes on their forgiven loans,” Glazer said. “The Franchise Tax Board has made it clear that action is necessary, so we need to take up legislation as quickly as possible so that any uncertainty is resolved before people pay their taxes next spring.”