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HD 3688

An Act excluding student loan forgiveness from taxable income for permanently and totally disabled veterans

194th Legislature (2025-2026) Introduced by Dave Rogers

Massachusetts bill exempts student loan forgiveness from state income tax for permanently and totally disabled veterans to reduce unexpected tax liability from debt relief.

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WeVote Research Nonpartisan
Bill Summary · HD 3688

Legislative bill overview

HD 3688 would exclude student loan forgiveness from taxable income specifically for permanently and totally disabled veterans. Currently, when student loans are forgiven, the forgiven amount is treated as taxable income by the IRS. This bill creates a state-level tax exemption for this forgiven debt relief when it applies to veterans with permanent total disability.

Why is this important

Permanently and totally disabled veterans already face significant financial hardship and reduced earning capacity. Being taxed on forgiven student loan debt creates an unexpected tax burden that could offset the intended relief benefit. This targets tax policy toward a vulnerable population that has made sacrifices through military service.

Potential points of contention

  • Federal-state tax coordination complexity: State tax exemptions for federally forgiven debt can create administrative and compliance complications, requiring clear guidance on how state and federal treatment interact
  • Scope and cost questions: Whether the exemption should extend to all disability-based loan forgiveness programs or only specific ones, and the fiscal impact on state revenue
  • Fairness considerations: Whether other groups facing financial hardship from forgiven debt (non-veterans, partially disabled individuals) should receive similar treatment, or whether veteran status justifies differential treatment

Compiled from official sources — confirm details with the bill’s official record.

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