Mortgage Debt Tax Forgiveness Act of 2025

This bill would make permanent a tax break that lets homeowners avoid paying taxes on forgiven mortgage debt for their main home. Right now, if a lender forgives up to $750,000 of mortgage debt (or $375,000 for married people filing separately), that forgiven amount does not count as income on federal taxes. This applies to debt used to buy, build, or significantly improve a main home. Under current law, this tax break is set to expire on January 1, 2026, but this bill would remove that expiration date and keep the rule in place permanently.

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