2021 Senate Bill 25 / Public Act 120

Exempt forgiven disabled veteran student loan proceeds from income tax

Introduced in the Senate

Jan. 13, 2021

Introduced by Sen. Tom Barrett (R-24)

To exempt from state income tax the value of federally-backed student loans to disabled veterans that have been “forgiven.” Under current law, the balance of loans that are forgiven after the borrower has already received the money is considered taxable income.

Referred to the Committee on Finance

March 11, 2021

Reported without amendment

With the recommendation that the substitute (S-1) be adopted and that the bill then pass.

March 23, 2021

Passed in the Senate 35 to 0 (details)

To exempt from state income tax the value of federally-backed student loans to disabled veterans that have been “forgiven.” Under current law, the balance of loans that are forgiven after the borrower has already received the money is considered taxable income. This would be retroactive to 2016.

Received in the House

March 23, 2021

Referred to the Committee on Tax Policy

April 28, 2021

Reported without amendment

Without amendment and with the recommendation that the bill pass.

Oct. 14, 2021

Passed in the House 105 to 2 (details)

To exempt from state income tax the value of federally-backed student loans to disabled veterans that have been “forgiven.” Under current law, the balance of loans that are forgiven after the borrower has already received the money is considered taxable income. This would be retroactive to 2016.

Signed by Gov. Gretchen Whitmer

Dec. 7, 2021