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HD 3672

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

194th Legislature (2025-2026) Introduced by Rich Haggerty

Excludes from Massachusetts gross income the forgiven educational loan amounts for veterans permanently and totally disabled, aligning state tax with federal discharge rules.

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Bill Summary · HD 3672

Summary of House Bill HD 3672

Purpose

HD 3672 seeks to ensure that certain student loan forgiveness amounts are not treated as Massachusetts gross income for state personal income tax purposes. Specifically, it would exclude from taxable income the amount forgiven through a discharge of an educational loan for veterans who are permanently and totally disabled.

Key provisions

  • Amends Chapter 62, Section 2, of the Massachusetts General Laws (as of the 2016 edition) by adding a new subparagraph (R) to subsection (a), paragraph (2).
  • New provision: Any amount received by a veteran who is permanently and totally disabled that would be includible in gross income for the taxable year because of a discharge of an educational loan under section 108(f)(5)(A)(iii) of the Internal Revenue Code shall be excluded from Massachusetts gross income for that year.
  • The change aligns Massachusetts tax treatment with the incentive to forgive student loans for disabled veterans by removing that forgiven amount from state taxable income.

Who is affected

  • Primary beneficiaries: Veterans who are permanently and totally disabled and who have had an educational loan discharged under federal law (IRS Code 108(f)(5)(A)(iii)).
  • Administrative: Massachusetts Department of Revenue would apply the exclusion in computing an eligible taxpayer’s MA personal income tax liability, once enacted.

Procedural and timeline notes

  • Status in the provided materials identifies the bill as a proposed measure in the 194th General Court (2025-2026) filed in January 2025, with the authorship attributed to Representatives Haggerty and Giannino.
  • The excerpt does not specify an effective date or retroactive applicability; the enacted text would need to include an effective date to determine when the exclusion starts (e.g., for tax years after enactment or a specific calendar year).

Potential impact

  • Tax relief for a targeted group of veterans by reducing their state taxable income, potentially lowering their Massachusetts personal income tax bills.
  • Represents a targeted conformity step with federal disability discharge provisions, reducing the risk of double taxation on forgiven loan amounts at the state level.

Notes for readers

  • The summary reflects the text provided; the final enacted version could include an effective date, transitional rules, or related clarifications.
  • For compliance, affected veterans would rely on state tax filings to claim the exclusion when relevant loan forgiveness occurs.

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

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