LANSING, Mich. — Sen. Tom Barrett’s legislation to allow some disabled veterans to continue deducting the amount of their student loans from their taxable income after the federal requirement allowing the practice ends has been sent to Gov. Gretchen Whitmer to be signed into law.
“Veterans who are totally and permanently disabled have made an incredible sacrifice for our freedom at great cost to themselves; we must do all we can to assist them,” said Barrett, R-Charlotte. “I am thankful this bill received overwhelming bipartisan support and look forward to the governor signing it when it reaches her desk.”
Senate Bill 25 was officially enrolled by the Senate for presentation to the governor on Tuesday after passing 105-2 in the House and unanimously in the Senate earlier this year.
Under federal law, student loan debt forgiveness for veterans who have received a total and permanent disability discharge is not currently taxed at the state level, although that provision is set to expire. SB 25 maintains that tax relief by requiring the state to allow eligible veterans to deduct the amount of a discharged loan from their adjusted gross income provided it was not previously excluded at the federal level.
“Qualifying disabled veterans are able to have their federal student loan debt discharged and their obligation to repay the loan canceled. Currently, the discharged loan is not included in an eligible veteran’s adjusted gross income; and therefore, the value of the loan is not subject to income tax,” Barrett said.
“Unfortunately, because Michigan uses the federally determined AGI in assessing taxable income, qualifying veterans will be required to pay state income tax on the amount of a student loan when the federal provision expires at the end of 2025. This bill will make sure that doesn’t happen; it is the least we can do for the disabled veterans who sacrificed so much for us.”