Bill > HR917

This bill, known as the Mortgage Debt Tax Forgiveness Act of 2025, seeks to permanently modify the Internal Revenue Code to exclude certain mortgage debt forgiveness from a homeowner's gross taxable income. Specifically, the bill amends Section 108(a)(1)(E) of the tax code to make permanent a provision that prevents homeowners from being taxed on mortgage debt that is forgiven, typically in situations like foreclosures, short sales, or loan modifications. Currently, this tax exclusion has been temporary and subject to periodic renewal. Under this bill, homeowners who have qualified principal residence indebtedness discharged after December 31, 2025, would not have to report that forgiven debt as taxable income. This can provide significant financial relief for homeowners facing financial hardship, as without such an exclusion, forgiven mortgage debt could be treated as taxable income, potentially creating a substantial tax burden for individuals already experiencing economic challenges.