To amend the Internal Revenue Code of 1986 to exclude certain student loan forgiveness from gross income.
Bill: H.R.1683 | Sponsor: Rep. Davis, Danny K. (D-IL)
Policy area: Taxation

Summary:
This bill modifies the tax treatment of income attributable to the forgiveness of certain student loan indebtedness incurred between 2021 and 2026. It excludes from student gross income, for income tax purposes, income from the discharge of student loans for postsecondary education expenses, private education loans, and loans from certain tax-exempt educational organizations.

To amend the Internal Revenue Code of 1986 to exclude certain student 
                  loan forgiveness from gross income.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. MODIFICATION OF TREATMENT OF STUDENT LOAN FORGIVENESS.

    (a) In General.--Section 108(f) of the Internal Revenue Code of 
1986 is amended by striking paragraph (5) and inserting the following:
            ``(5) Special rule for discharges in 2021 through 2025.--
        Gross income does not include any amount which (but for this 
        subsection) would be includible in gross income by reason of 
        the discharge (in whole or in part) after December 31, 2020, 
        and before January 1, 2026, of--
                    ``(A) any loan provided expressly for postsecondary 
                educational expenses, regardless of whether provided 
                through the educational institution or directly to the 
                borrower, if such loan was made, insured, or guaranteed 
                by--
                            ``(i) the United States, or an 
                        instrumentality or agency thereof,
                            ``(ii) a State, territory, or possession of 
                        the United States, or the District of Columbia, 
                        or any political subdivision thereof, or
                            ``(iii) an eligible educational institution 
                        (as defined in section 25A),
                    ``(B) any private education loan (as defined in 
                section 140(a)(7) of the Truth in Lending Act),
                    ``(C) any loan made by any educational organization 
                described in section 170(b)(1)(A)(ii) if such loan is 
                made--
                            ``(i) pursuant to an agreement with any 
                        entity described in subparagraph (A) or any 
                        private education lender (as defined in section 
                        140(a) of the Truth in Lending Act) under which 
                        the funds from which the loan was made were 
                        provided to such educational organization, or
                            ``(ii) pursuant to a program of such 
                        educational organization which is designed to 
                        encourage its students to serve in occupations 
                        with unmet needs or in areas with unmet needs 
                        and under which the services provided by the 
                        students (or former students) are for or under 
                        the direction of a governmental unit or an 
                        organization described in section 501(c)(3) and 
                        exempt from tax under section 501(a), or
                    ``(D) any loan made by an educational organization 
                described in section 170(b)(1)(A)(ii) or by an 
                organization exempt from tax under section 501(a) to 
                refinance a loan to an individual to assist the 
                individual in attending any such educational 
                organization but only if the refinancing loan is 
                pursuant to a program of the refinancing organization 
                which is designed as described in subparagraph (C)(ii).
        The preceding sentence shall not apply to the discharge of a 
        loan made by an organization described in subparagraph (C) or 
        made by a private education lender (as defined in section 
        140(a)(7) of the Truth in Lending Act) if the discharge is on 
        account of services performed for either such organization or 
        for such private education lender.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to discharges of loans after December 31, 2020.
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