WASHINGTON – Congressman Joe Neguse introduced legislation on Thursday, Sept. 2, to reduce taxes on veterans who take advantage of student loan discharge provisions.
His bill, the Veterans Equitable Taxation of Student Loans Act, would retroactively and perpetually exempt veterans whose student loan debt was discharged due to death or permanent, total disability from tax liability on their forgiven loans.
Congressman Neguse said, “Forgiving student debt for veterans who have died or become permanently disabled is a great first step, but taxing that forgiveness is grossly unfair and unjust. We need to ensure that past and future service members, who sacrifice their minds and bodies for this country, will not be saddled with taxes on the benefits they earn through their sacrifice.”
Before 2018, discharged student loan debt was taxable as income for those who received debt relief because of a death or permanent, total disability. The provision in the Internal Revenue Code of 1986 was amended to cover any person who has been killed or become totally and permanently disabled after December 31, 2017.
This amendment resulted in thousands of veterans and their families whose service-connected debt forgiveness before 2018 left them with crushing tax bills.
This bill is part of Congressman Neguse’s focus on supporting homeless veterans via job training and job placement.
To read the full bill, click here.