New Bill Makes Nurse Corps Loan Repayments Tax-Free, Boosting Healthcare Recruitment

This bill, the Nurse Corps Tax Parity Act of 2025, is straightforward: it changes the tax code to make certain financial benefits received through the federal Nurse Corps program non-taxable. Essentially, if you’re a nurse getting help paying off your student loans or receiving a scholarship through this program, the IRS won’t treat that money as income anymore. These changes apply to any money received in tax years starting after the bill becomes law.

The Real Value of Loan Repayment

Right now, when the government pays off your student debt through programs like the Nurse Corps Loan Repayment Program, that forgiven amount is often considered taxable income. It’s a great benefit, but it comes with a surprise tax bill. This bill fixes that. By updating Section 108(f)(4) of the tax code, it ensures that specific loan repayment amounts under the Nurse Corps program (Section 846 of the Public Health Service Act) are excluded from your taxable income, just like some other federal loan forgiveness programs.

Think about it this way: If you receive $30,000 in loan repayment, you might currently owe several thousand dollars in taxes on that amount. If this bill passes, that $30,000 is truly $30,000 in savings. For a nurse working long hours, possibly in an underserved area to qualify for the program, this is a huge win. It significantly increases the financial incentive to join the Nurse Corps and serve communities with critical shortages, making the program much more attractive to new recruits.

Scholarships Get a Clear Pass, Too

Beyond loan repayment, the bill also clarifies the tax status of scholarships. It specifically adds scholarships received under the Nurse Corps scholarship program (also Section 846) to the list of qualified scholarships that are not counted as taxable income (Section 117(c)(2)(A)). While many scholarships are already tax-free, this move removes any ambiguity for Nurse Corps participants. For a student nurse relying on this funding to cover tuition and fees, this means one less financial headache and a clearer path to graduation and service.

Why This Matters for Everyone Else

This isn't just a tax break for nurses; it's a strategic move to address healthcare shortages. The Nurse Corps program places qualified nurses, nurse practitioners, and other professionals in critical shortage facilities across the country—often in rural areas or inner cities. By making the financial benefits truly tax-free, the government is essentially putting more money in the pockets of these essential workers and making the commitment to serve in tough locations more worthwhile. For the rest of us, that means better staffing and better care in places that desperately need it, which is the whole point of the program.