Sponsor
Jefferson Van Drew
Representative · R-NJ
Representative · R-NJ
The bill boosts after-tax income and simplifies tax filing for military retirees and survivors, at the cost of reduced federal revenue and perceived unfairness for non-military pensioners (with some short-term tax planning effects).
Veterans and surviving military annuitants will no longer pay federal income tax on military pensions and survivor annuities, increasing their after-tax income and improving household financial stability.
Veterans and affected taxpayers will have simpler tax reporting because the bill creates an explicit Code exclusion for federal military pensions, reducing filing complexity and disputes over tax treatment.
All taxpayers will face reduced federal revenue because military pensions are excluded from taxable income, potentially increasing deficits or forcing cuts/reprioritization in federal programs.
Non-military federal and private-sector retirees do not receive the same exclusion, creating perceived unfairness and potential political backlash among other pensioners.
Some taxpayers may restructure income or timing around the effective date to maximize the benefit, producing short-term tax planning complexity and administrative burden.
Based on analysis of 2 sections of legislative text.
Excludes federal military pensions and annuities from gross income for federal income tax purposes, including amounts paid to beneficiaries.
Official title: To amend the Internal Revenue Code of 1986 to exclude pensions of members of the Armed Forces from gross income.
Introduced June 8, 2026 by Jefferson Van Drew · Last progress June 8, 2026
Exempts from federal gross income any pension or annuity paid by the Federal Government for service as a member of the U.S. Armed Forces, whether received by the service member or by a beneficiary. The change is added to the Internal Revenue Code and applies to taxable years beginning after enactment. The bill consists of a short title provision and a single substantive amendment to the tax code that creates the new exclusion, with a conforming table of sections entry; it does not appropriate funds or create new agency duties.