Tax Relief

Barrett’s Invoice to Retain Tax Reduction for Disabled Veterans to the Governor

LANSING, me. – Senator Tom Barrett’s legislation allowing some disabled veterans to continue deducting the amount of their student loans from their taxable income after the state end-of-practice request was sent to Governor Gretchen Whitmer for the law to be signed.

“Veterans who are completely and permanently disabled have made an incredible sacrifice for our freedom, and at a great cost to themselves; we must do everything we can to help them, ”said Barrett, R-Charlotte. “I am grateful that this bill has received overwhelming bipartisan support and I look forward to the governor signing it when it reaches her desk.”

Senate Bill 25 was officially enrolled by the Senate for submission to the governor Tuesday after passing 105-2 in the House of Representatives and unanimously in the Senate earlier in the year.

Under federal law, student loan debt relief for veterans who have received full and permanent relief is currently not taxed at the state level, although that provision is expiring. SB 25 is sticking to this tax break by asking the state to allow eligible veterans to deduct the amount of a settled loan from their adjusted gross income, unless previously ruled out at the federal level.

“Qualified disabled veterans have the option to pay their federal student loan debt and release their loan repayment obligation. Currently, the loan disbursed is not included in an Eligible Veteran’s Adjusted Gross Income; Therefore, the value of the loan is not subject to income tax, ”Barrett said.

Unfortunately, because Michigan uses the state AGI in determining taxable income, qualified veterans will have to pay state income tax on the amount of a student loan when the federal regime expires in late 2025. This bill will ensure that doesn’t happen; it is the least we can do for the disabled veterans who have sacrificed so much for us. “

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