Dancer bill protecting disabled veterans’ federal student loan debt from state income taxes advances

Dancer bill protecting disabled veterans’ federal student loan debt from state income taxes advances

Ron Dancer

TRENTON, N.J. – The Assembly Military and Veterans Affairs Committee on Monday took action to assure disabled veterans that their federally-discharged student loan debt would not be subject to state income taxes by moving a measure sponsored by Assemblyman Ron Dancer since 2019.

The bill (A655) codifies that New Jersey’s income tax exclusion for canceled debt also applies to a disabled veteran’s federal student loan debt that has been forgiven through the total and permanent disability discharge program.

“Our disabled veterans are paying a lifelong price for their service to the state and our nation,” said Dancer (R-Ocean). “Excluding their federally-forgiven student loan debt from state income taxes is a small gesture compared to the sacrifice they made while in the military.”

Under the U.S. Department of Education’s total and permanent disability discharge program, veterans who are permanently disabled due to a service-related condition are eligible to have their federal student loan debt completely canceled, tax-free. Former President Donald Trump signed an executive order in August 2019 directing the Department of Education to automatically identify veterans eligible for loan forgiveness through the program.

“The changes at the federal level by the Trump Administration to expedite the forgiveness process for disabled veterans, along with this legislation at the state level, will ultimately benefit New Jersey veterans who are unfairly carrying burdensome student loan debt,” said Dancer.

Last session, the bill (A803) unanimously passed the Assembly but was never considered by the Senate.