Congress expands tax breaks for doctors willing to work in underserved areas

What it does

This bill amends the tax code to exclude certain health professions education scholarships and loan repayment assistance from taxable income. Specifically, it exempts payments received under federal Public Health Service Act loan repayment programs, state-run loan repayment or forgiveness programs targeting underserved areas, and certain federal scholarship programs (including one for Native Hawaiian health professionals) from being counted as gross income for tax purposes. The effect is that health professionals receiving these payments will owe no federal income tax on them.

Why we flagged it

The bill's operative mechanism is a targeted tax exclusion designed to reduce the financial burden on health professionals who commit to serving underserved areas, thereby incentivizing workforce distribution to areas with health professional shortages.

What the text implies

• The tax exclusion applies to state-designed programs with minimal federal definition ('any other State loan repayment or loan forgiveness program'), creating potential for states to design programs that nominally target shortage areas but may have looser targeting criteria than federal programs.
• By excluding these payments from gross income, the bill reduces federal tax revenue; the cost is not appropriated but flows through the tax code as foregone revenue, making the true fiscal impact less visible than a direct spending program.
• The inclusion of Native Hawaiian Health Care Improvement Act scholarships (section 10) may create a precedent for other culturally or geographically targeted health workforce programs to seek similar tax treatment.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Ordinary citizens in underserved and health-shortage areas gain improved access to health care by incentivizing professionals to work there through tax-free education assistance. Health professionals themselves benefit from reduced tax burden on education support, though the primary public benefit is expanded health care access in underserved communities.

Who stands to gain

• health professionals (physicians, nurses, dentists, mental health providers) receiving loan repaymen
• states operating loan repayment or forgiveness programs for health professionals

Named in the bill

Internal Revenue Code of 1986, Public Health Service Act (sections 338B, 338I, 338K, 846, 738, 775, 781), Native Hawaiian Health Care Improvement Act, Health and Human Services (administers PHS Act programs), State health workforce programs

Where it stands

7 cosponsors: 4 Republicans, 3 Democrats.

• Jan 21, 2025 — Introduced · Congress.gov: “Introduced in House”
• Jan 21, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

8 lobbying clients named this bill on 11 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $4,438,169 in lobbying spend. A filing names 48 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 88% of bills with at least one filing.

Jill Tokuda, the sponsor, reported $185,450 in PAC receipts in the 2026 cycle.

• American Academy of Family Physicians — $1,715,904 on 2 filings
• Association of American Medical Colleges — $1,529,833 on 2 filings
• American Psychiatric Association — $529,365 on 2 filings
• American Federation of Teachers — $410,000 on 1 filing
• American Association of Colleges of Osteopathic Medicine — $100,000 on 1 filing

Lobbying Disclosure Act filings through Jul 22, 2026. A filing shows who paid to lobby on a bill it names, not what changed.