Sponsors (2)
The bill makes AmeriCorps educational awards and related loan discharges tax-free to boost the net benefit of national service, trading a modest reduction in federal revenue and potential taxpayer confusion over the policy's narrow scope.
AmeriCorps participants and students who use national service educational awards: those awards will be excluded from federal taxable income and any loan discharges tied to payments made with those awards will not generate taxable discharge-of-indebtedness income, increasing the net financial benefit of service.
Federal revenue: excluding these awards from taxable income reduces the taxable base and could modestly decrease federal tax receipts, slightly increasing budgetary pressure.
Some taxpayers and borrowers: the change only applies to AmeriCorps national service educational awards (and related loan discharges), so people may be confused or mistakenly expect similar tax relief for other forms of student loan forgiveness.
Based on analysis of 2 sections of legislative text.
Excludes AmeriCorps national service educational awards and related student loan discharges from federal gross income so recipients generally won’t pay federal income tax on them.
Introduced March 9, 2026 by John B. Larson · Last progress March 9, 2026
Excludes AmeriCorps national service educational awards from federal gross income and makes any student loan discharge tied to those awards non-taxable, so recipients generally will not owe federal income tax on the award or loan forgiveness paid with the award. The change is made by amending the Internal Revenue Code and applies to taxable years ending after enactment.