YourVoice.Now Summary
Your MoneyTransparency & AccountabilityIf a lender writes off part of your home loan, you would not be taxed on it — for good.
Your Money
When a lender writes off part of your home loan, the IRS normally treats that amount as income and taxes it. This bill would end that tax on your main home, for up to $750,000 of loan debt.
Transparency & Accountability
The tax break has always come with an end date, so Congress had to keep renewing it. The latest end date hit on January 1, 2026, and this bill would drop it for good.
More about this bill
If your lender forgives part of what you owe on your home, the IRS can tax that as income. You could owe a tax bill on money you never saw. This bill would end that tax for good on your main home. The break covers up to $750,000 of home loan debt, or $375,000 if you are married and file separately. Congress created this break during the housing crisis, and it has been renewed in short stretches ever since. The latest stretch ran out on January 1, 2026, so forgiven home debt is taxable again today. The bill would cover debt forgiven after December 31, 2025. From then on, the break would have no end date. People going through a short sale, a loan change, or a foreclosure would feel it first.
Congressional Summary
Mortgage Debt Tax Forgiveness Act of 2025 This bill makes permanent the exclusion of the discharge of qualified principal residence indebtedness from gross income for federal tax purposes. Under current law, a taxpayer may generally exclude from gross income up to $750,000 (or $375,000 if married but filing a separate federal tax return) from the discharge of indebtedness that is (1) incurred to purchase, build, or substantially improve a principal residence (or refinance such indebtedness); and (2) secured by the principal residence. The discharge must currently occur before January 1, 2026, and some limitations apply.
Legislative Subjects
Details
- Congress
- 119th
- Chamber
- Status
- summarized
- Action
- Introduced in House
- Action Date
- 2025-02-04
- Date Added
- 2026-03-31
- Source
- Congress.gov →
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