Summary

Excludes from federal gross income any amount earned by active-duty members of the Armed Forces, creating a new Internal Revenue Code provision that treats active-duty military pay as tax‑excluded for federal income tax purposes. The exclusion applies to income earned after the second October 1 following enactment (effectively about two years after enactment). The change reduces federal taxable income for active-duty service members, likely lowers federal individual income tax receipts, and will require the IRS and payroll systems to update rules and withholding procedures; it does not appropriate funds or create new benefit programs.

• Creates a new federal tax provision excluding from gross income any amount earned by active-duty Armed Forces members.
• Effective for income earned after the second October 1 following enactment (roughly two years later).
• Applies broadly to "any amount earned," which may require clarifying guidance on pay categories and allowances.
• Likely reduces federal individual income tax revenue; no revenue estimates are provided in the text.
• Does not appropriate funds, authorize new spending, or impose mandates on states or localities.
• Requires IRS rulemaking and updates to payroll withholding, tax forms, and filing instructions.
• May change state tax liabilities for service members depending on state conformity to federal law.
• Simple, narrowly targeted change to the tax code focused on active-duty military pay.