Bill would lift tax on veterinary student loan repayment program

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A bipartisan proposal to eliminate the federal tax on a Department of Agriculture program that pays off student loan debt for veterinarians working in underserved areas of the country is back before Congress.

On Feb. 10, Republican Sen. Mike Crapo of Idaho and Democratic Sen. Debbie Stabenow of Michigan introduced the Veterinary Medicine Loan Repayment Program Enhancement Act (S. 440) to exempt VMLRP awards from a 39 percent federal income withholding tax, which would allow more veterinarians to participate in the program.

Administered by the USDA, the program provides select food animal and public health veterinarians up to $75,000 in loan repayment for a three-year commitment to practice in an area of the country where their services are most needed.

Since 2010, 286 veterinarians have participated in the VMLRP, serving in 45 states, in Puerto Rico, and on federal lands. They have helped protect food safety, improve animal health and welfare, promote sustainable economic development, and guard against the introduction of foreign animal diseases.

“Shortages of food animal veterinarians raise serious concerns as many areas of the country have a disproportionate number of animals compared to available veterinary services,” Crapo said. “This legislation will provide a lifeline to rural communities by incentivizing well-trained veterinarians to serve in the areas where they are needed most.”

The Internal Revenue Service currently takes 39 cents of every dollar Congress appropriates to the program. According to the AVMA, which is advocating for the tax exemption, if Congress were to lift the withholding tax as it did in 2004 with the VMLRP’s human medicine counterpart, roughly one additional veterinarian could participate for every three currently enrolled in the program.

“Veterinarians are such an important part of animal health and our agricultural economy. Yet, too many communities in Michigan, and throughout the country, lack access to their services,” said Stabenow, ranking member of the Senate Agriculture Committee. “That’s why Congress needs to work in a bipartisan way to pass this legislation. Our bill supports our farmers and rural communities by creating stronger incentives for veterinarians to practice in underserved areas.”

Legislation exempting the program from the withholding tax was introduced in the last congressional session but failed to pass. More than 150 veterinary-, commodity-, and agriculture-related organizations support the bill, and the AVMA continues to seek its passage.

“The AVMA has lobbied hard for the Veterinary Medicine Loan Repayment Program Enhancement Act over the last six years because we understand the far-reaching impacts that it can have on improving the health and welfare of our nation’s livestock and sustaining U.S. agriculture production,” AVMA President Ted Cohn said.

Read more about the VMLRP, the legislation, and participant testimonies.