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Tax Exemption
for the
National Veterinary Medical Services Act
(the veterinary medical loan repayment program)
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AVMA Position/Request
- An amendment to the Internal Revenue Code is needed to make funds disbursed under P.L. 108-161, the National Veterinary Medical Services Act (the veterinary medical loan repayment program) exempt from gross income and employment taxes.
- Gross income should not include any amount received under section 1415A of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (7 USC 3151a).
- The proposal should take effect for taxable years beginning after December 31, 2009.
- Proposed legislative language follows (additions italicized and underlined):
28 U.S.C. § 108(f)(4): Payments under national health service corps loan repayment program and certain state loan repayment programs and the national veterinary medical service act loan repayment program – In the case of an individual, gross income shall not include any amount received under section 338B(g) of the Public Health Service Act or under a State program described in section 338I of such Act or under the National Veterinary Medical Service Act, P.L. 108-161, 117 Stat. 2014.
Current Status
- VMLRP is subject to taxation. Each dollar spent on taxes means one less available for loan repayment.
- $1,885,875 has been appropriated by Congress. Of this amount, $735,491 will go to pay taxes if the program is not made tax exempt.
- VMLRP pays recipient's qualifying educational loans, not exceeding the total amount of qualified debt, in addition to 39% for tax liability.
- 46 recipients can be awarded assuming each recipient receives $25,000 annually if the Agriculture Secretary pays 39% tax liability on behalf of recipients.
- 75 recipients can be awarded if Congress exempts the program from taxation.
- The inaugural award cycle is expected to commence in Spring/Summer 2009.
Why AVMA Supports Funding for Veterinary Loan Repayment
- Loan repayment is essential to address critical workforce shortages of veterinarians practicing food animal medicine, food safety and public health.
- 8,850 veterinarians practice food animal medicine (food animal exclusive, food animal predominate, and mixed animal veterinarians who have 30% or more involvement with food animal species).
- 85,000 veterinarians practice in the U.S. (all types of practice).
- Every state faces shortages of veterinarians -- 500 counties have at least 5,000 farm animals but no veterinarians living there to treat them while 1,300 counties have less than one food animal veterinarian per 25,000 farm animals.
- $120,000 is the average educational debt for veterinarians graduating in 2008.
- 90% of graduates left veterinary medical school with debt.
- $1,381 monthly is needed to repay $120,000 on a standard 10-year plan assuming a standard interest rate of 6.8%.
- $61,518 is the average starting salary of a 2008 graduate. Veterinarians entering large and mixed animal practice were compensated below that average.
- Since 1980, the U.S. population has increased by 35% while the number of veterinarians has remained stagnant. Only 2,600 new veterinarians enter the workforce annually having graduated from one of the nation's 28 veterinary medical colleges located in 26 states.
Known Opposition to the AVMA Position: None
Contact: Gina Luke, Assistant Director, AVMA-GRD, (202) 289-3204, gluke@avma.org.
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= AVMA/SAVMA Members Only
