House File 2525 - Introduced HOUSE FILE 2525 BY WULF A BILL FOR An Act creating tax deductions against the individual income 1 tax for veterinarians by providing a deduction for income 2 resulting from rural veterinarian loan repayments and by 3 allowing a deduction for the amount of interest paid on 4 student loans for attendance at a veterinary school, and 5 including retroactive applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 5973YH (2) 91 jm/jh

H.F. 2525 Section 1. Section 422.7, Code 2026, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 46. a. (1) Subtract, to the extent 3 included, income resulting from loan repayments received under 4 a program agreement entered into by a taxpayer who is a loan 5 repayment recipient and the Iowa college student aid commission 6 pursuant to section 256.226, if the taxpayer fulfills the 7 obligation to engage in the practice of veterinary medicine 8 according to terms of that section and the program agreement. 9 (2) The deduction in subparagraph (1) shall not exceed the 10 following limits: 11 (a) For any tax year, fifteen thousand dollars. 12 (b) For the aggregate of all tax years, sixty thousand 13 dollars. 14 (c) In any case, the amount of the outstanding eligible 15 loan. 16 b. (1) Subtract, to the extent not already excluded, the 17 amount of interest paid by a veterinarian during the tax year 18 on a qualified education loan for attendance at an accredited 19 or approved college of veterinary medicine, if the veterinarian 20 practiced veterinary medicine in the state during the tax year. 21 (2) The deduction in this paragraph “b” shall not be allowed 22 when the taxpayer is receiving a loan repayment pursuant to 23 section 256.226 in the same tax year. 24 (3) As used in this paragraph “b” : 25 (a) “Accredited or approved college of veterinary medicine” 26 means the same as defined in section 169.3. 27 (b) “Qualified education loan” means the same as defined in 28 section 221 of the Internal Revenue Code. 29 (c) “Veterinarian” means the same as defined in section 30 169.3. 31 (d) “Veterinary medicine” means the same as defined in 32 section 169.3. 33 c. The department shall adopt rules pursuant to chapter 34 17A to administer this subsection including the number of days 35 -1- LSB 5973YH (2) 91 jm/jh 1/ 3

H.F. 2525 of veterinarian practice required in this state in order to be 1 eligible for the deduction under paragraph “b” . 2 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies 3 retroactively to January 1, 2026, for tax years beginning on 4 or after that date. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanation’s substance by the members of the general assembly. 8 This bill creates two separate tax deductions against 9 the individual income tax for veterinarians by providing a 10 deduction for income resulting from rural veterinarian loan 11 repayments and by allowing a deduction for the amount of 12 interest paid on student loans for attendance at a veterinary 13 school. 14 DEDUCTION FOR RURAL VETERINARIAN LOAN REPAYMENTS. The bill 15 allows a licensed veterinarian participating in the rural 16 veterinarian loan repayment program to deduct net income 17 attributable to loan payments received under the program, 18 subject to the restrictions provided in the program. The 19 amount subject to the exclusion cannot exceed $15,000 per tax 20 year, and an aggregate of $60,000 for all tax years. However, 21 in any case, the excluded amount cannot exceed the amount of 22 the outstanding eligible loan. 23 DEDUCTION FOR INTEREST AMOUNT PAID ON STUDENT LOANS. Under 24 current law for federal income tax purposes and therefore for 25 Iowa income tax purposes, an individual is allowed to deduct 26 up to $2,500 of interest paid on a qualified education loan 27 (section 221 of the Internal Revenue Code). However, this 28 deduction is gradually phased out based upon the taxpayer’s 29 income level. 30 The bill allows a veterinarian to deduct, for Iowa income tax 31 purposes, the total amount of interest paid during the tax year 32 on a qualified education loan for attendance at an accredited 33 or approved college of veterinary medicine, if the veterinarian 34 practiced veterinary medicine in the state during the tax year. 35 -2- LSB 5973YH (2) 91 jm/jh 2/ 3

H.F. 2525 The deduction for the interest paid during the tax year is not 1 allowed if the veterinarian is receiving a loan repayment under 2 the rural education loan repayment program in the same tax 3 year. 4 RULES. The department of revenue is required to adopt rules 5 to administer the bill including establishing the number of 6 days of veterinarian practice required in this state in order 7 to be eligible for the deduction for the amounts paid for 8 student loan interest. 9 APPLICABILITY. The bill applies retroactively to tax years 10 beginning on or after January 1, 2026. 11 -3- LSB 5973YH (2) 91 jm/jh 3/ 3