U.S. Reps. Ryan Costello (R-PA) and Peter Roskam (R-IL) joined together to advocate for legislation that would prevent some families from incurring a tax penalty if their child suffers death or permanent disability.
Currently, the federal government forgives certain student loan debt if the person who accrued it dies or becomes permanently disabled. However, the IRS considers the loan forgiveness income, and treats it as a taxable event.
“It is unacceptable that the IRS would tax grieving families on the forgiven student loans of a child who has passed away or suffered a permanent disability, which is why I’m proud to introduce legislation to end this tax penalty and hope to see it move forward quickly,” Costello said.
The Stop Taxing Death and Disability Act would rollback the IRS tax penalty for student loan forgiveness in the event of death or permanent disability. The bill had previously passed unanimously through the Ways & Means Committee in the previous Congress.
The new bill was introduced with U.S. Reps. Ron Kind (D-WI) and Chellie Pingree (D-ME).
“The loss of a child takes a nearly unimaginable toll on any family,” Roskam said. “The federal government offers to forgive student loan debt in these circumstances — and it’s the right thing to do. The IRS, however, pours salt into the wounds of these families by taxing them on the death of their child. Congress has the power to put this shameful practice to an end. We should do so without delay.”
U.S. Sen. Rob Portman (R-OH) introduced bipartisan companion legislation in the Senate.