Rep. Gregory Porter, D-Indianapolis.

“Because taxing student debt relief when we have a $6.1 billion and growing surplus is unfair and needlessly counterproductive, I am drafting a bill to retroactively eliminate and nullify any state individual income tax being imposed on Hoosiers who are finally in a position to receive vital student debt relief,” Porter said in a statement. “That way, impacted individuals can avoid up to $600 in tax liability that would result from this policy choice.”

The taxation would be based on the state income tax—which is currently at 3.23%—meaning those who receive $10,000 in forgiveness would see a $323 increase in state taxes.

The Indiana Department of Revenue said someone living in Marion County who sees $20,000 forgiven could have to pay $1,050 between state and county taxes, News 8 reported.

Indiana House Speaker Todd Huston, R-Fishers, issued the following statement: “We’re aware of the issue and I expect for conversations to continue as we head into the next legislative session.”

Rep. Bob Heaton, R-Terre Haute, who is chair of the Higher Education Subcommittee, was not available for comment.

The Tax Foundation, in August, listed five states that would tax the debt forgiveness—Arkansas, Minnesota, Mississippi, North Carolina and Wisconsin—leaving out the Hoosier State.

“The federal government and the vast majority of other states have correctly chosen not to tax student debt forgiveness,” Porter said. “I can’t say I’m surprised Indiana has chosen to take a punitive stance on a policy meant to give working-class Americans relief, but there’s still time to change this.”

The Penn Wharton Budget Model estimates Americans in the bottom 40% of household income—those under $50,795 a year—will receive around 30% of the loan forgiveness, and the top 40%—households with an annual income of at least $141,096—will receive about 43%.

—Jack Sells