I received Public Service Loan Forgiveness (PSLF) last year. Based on my research North Carolina does not tax PSLF as income. Is this correct?

[MaryK4]

Yes, North Carolina did not adopt Code § 108(f)(5), as amended by section 9675 of ARPA. An individual who excludes Federal Student Loan Relief from AGI on the federal tax return must add back the excluded amount when calculating North Carolina taxable income for taxable years beginning on or after January 1, 2021.

[DrShawnCole]

North Carolina DOR issued a NOTICE on 14 December 2022 which states that amounts forgiven under the Public Service Loan Forgiveness program is NOT treated as income and therefore does not have to be added to the person's AGI for tax purposes in North Carolina.  See the notice here:  open (ncdor.gov)  Read the whole Notice, but the specifics related to PSLF is outlined in footnote 8 at the bottom of page 3.

[DaveF1006]

According to this latest press release from the State of north Carolina, student loan forgiveness excluded pursuant to IRC 108(f)(5) is currently considered taxable income in North Carolina.

@DrShawnCole 

[DrShawnCole]

Yes, but PSLF forgiveness is not covered under 108(f)(5), but 108(f)(1).  See my edited post for details.

In addition, see notice from the NC Attorney General at:  Public Service Loan Forgiveness - NCDOJ

[christineelliott639]

Employee Tax Expert

 

According to this latest press release from the State of north Carolina, student loan forgiveness excluded pursuant to IRC 108(f)(5) is currently considered taxable income in North Carolina.

@DrShawnCole 

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‎April 14, 2023 9:09 AM

the link to the press release is not pulling up the press release. Any other way to access it?