Creating tax deductions against the individual income tax for veterinarians by providing a deduction for income resulting from rural veterinarian loan repayments and by allowing a deduction for the amount of interest paid on student loans for attendance at a veterinary school, and including retroactive applicability provisions

This bill creates two separate tax deductions against the individual income tax for veterinarians by providing a deduction for income resulting from rural veterinarian loan repayments and by allowing a deduction for the amount of interest paid on student loans for attendance at a veterinary school. DEDUCTION FOR RURAL VETERINARIAN LOAN REPAYMENTS. The bill allows a licensed veterinarian participating in the rural veterinarian loan repayment program to deduct net income attributable to loan payments received under the program, subject to the restrictions provided in the program. The amount subject to the exclusion cannot exceed $15,000 per tax year, and an aggregate of $60,000 for all tax years. However, in any case, the excluded amount cannot exceed the amount of the outstanding eligible loan. DEDUCTION FOR INTEREST AMOUNT PAID ON STUDENT LOANS. Under current law for federal income tax purposes and therefore for Iowa income tax purposes, an individual is allowed to deduct up to $2,500 of interest paid on a qualified education loan (section 221 of the Internal Revenue Code). However, this deduction is gradually phased out based upon the taxpayer’s income level. The bill allows a veterinarian to deduct, for Iowa income tax purposes, the total amount of interest paid during the tax year on a qualified education loan for attendance at an accredited or approved college of veterinary medicine, if the veterinarian practiced veterinary medicine in the state during the tax year. The deduction for the interest paid during the tax year is not allowed if the veterinarian is receiving a loan repayment under the rural education loan repayment program in the same tax year. RULES. The department of revenue is required to adopt rules to administer the bill including establishing the number of days of veterinarian practice required in this state in order to be eligible for the deduction for the amounts paid for student loan interest. APPLICABILITY. The bill applies retroactively to tax years beginning on or after January 1, 2026.