On June 1, 2023, Congress passed the Fiscal Responsibility Act, averting a first-ever government debt default. The bill includes a two-year suspension of the debt ceiling now set at $31.4 trillion which will allow the government to continue paying for things like social security payments and veteran benefits.
You may be wondering, “What else is included in the debt ceiling deal and how does it impact me?” Don’t worry we have you covered. Here are some key measures in the debt ceiling bill:
- Ends the freeze on student loan payments. In November 2022, the Biden-Harris Administration extended the pause on student loan payments to 60 days from June 30, through August 2023, following the block on Biden’s student loan forgiveness program. Under the debt ceiling bill, if you have a federal student loan you will need to resume making payments after August 2023. Once you start making payments, you will once again be paying any student loan interest so remember at tax-time you can deduct student loan interest up to $2,500 to increase your refund or reduce what you owe. The bill does not include measures to halt the President’s policy to forgive between $10,000 and $20,000 in student loan debt for eligible borrowers as the fate of that lies with the U.S. Supreme Court.
- Changes to SNAP requirements. The debt ceiling bill includes additional work requirements for certain individuals who are eligible for Supplemental Nutrition Assistance Program (SNAP) formerly known as the Food Stamps Program. Beginning in 2023, adults 50 to 54 years of age with no kids living in their home will have additional work requirements in order to get food stamps. The bill also expands SNAP access for veterans and those experiencing homelessness.
- Cuts IRS funding. The Inflation Reduction Act included $80 billion in IRS funding, however the debt ceiling deal reduces some of the funding available to the IRS.
Still need to file your 2022 taxes? There’s no need to wait. You may have a refund coming and since a government shutdown was avoided, the processing of your return and tax refund will not be held up. The IRS issues tax refunds within 21 days or less of acceptance if you e-file with direct deposit. Even if you don’t have a refund coming, TurboTax can help you lower what you owe. You can come to TurboTax and hand your taxes over to a TurboTax Live Full Service tax expert who can do your taxes in one video meeting while the tax expert prepares your taxes.
Check back with the TurboTax blog for more up to date information regarding the debt ceiling deal and other breaking news.
