Disabled veterans who had debt discharged through the Total and Permanent Disability discharge program would not be subject to taxation thanks to bipartisan legislation sponsored by Senator Vince Polistina (R – Atlantic) and Senator Vin Gopal (D – Monmouth) that was approved today by the New Jersey Senate.

Disabled veterans who had debt discharged through the Total and Permanent Disability discharge program would not be subject to taxation thanks to bipartisan legislation sponsored by Sen. Vince Polistina and approved today by the New Jersey Senate. (Pixabay)

“Some veterans have suffered significant disabilities in the line of duty including paralysis, loss of sight, or severe psychological trauma. The last thing they need to worry about is how they are going to afford to pay taxes on discharged debt,” said Polistina (R-2). “This legislation will make sure New Jersey’s disabled veterans will never have to pay taxes on discharged student loan debt and will offer financial relief and stability to these injured veterans during their time of need.”

Under current law, discharge of indebtedness is not subject to New Jersey gross income tax and is not reportable by the taxpayer.

The bill, S-3051/A-655, would codify that treatment as it applies specifically to certain federal student loan indebtedness of a disabled veteran who has had that debt discharged through the Total and Permanent Disability discharge program of the U.S. Department of Education.

Cancellation of debt, including amounts discharged through the federal Total and Permanent Disability discharge program, is not currently subject to New Jersey gross income tax.