Virginia won’t tax forgiven student loans, despite news reports

Virginia will not tax as income student loans forgiven under a new plan announced by President Joe Biden last week, according to representatives of two state agencies.

“The amount of student loan debt that was forgiven will be left out of federal adjusted gross income, and, by extension, Virginia taxable income, without any further action by the General Assembly,” wrote Stephen Kindermann, a finance attorney in the Virginia Division of Legislative Services, in response to an inquiry from Del. Marcus Simon, D-Fairfax.

Heather Cooper, a spokeswoman for the Virginia Department of Taxation, also said in an email that “to the extent that student loans forgiven through the recently announced student loan forgiveness program are exempt from federal taxation … they would not be taxable on the Virginia income tax return.”