Sponsors (8)
The bill provides modest tax relief for retired public safety officers buying health or long-term care insurance in exchange for a small reduction in federal revenues and with benefits delayed until distributions after 2025.
Retired public safety officers (law enforcement, firefighters, EMS) can exclude up to $6,000 of qualifying plan distributions used to pay health and long-term care insurance premiums, reducing taxable income and lowering federal income tax liability for eligible retirees.
The larger exclusion reduces federal tax revenues, modestly increasing budgetary pressure or reducing funding available for other federal programs.
Eligible public safety officers with health or long-term care needs in the near term receive no benefit because the change only applies to distributions made after 2025.
Based on analysis of 2 sections of legislative text.
Doubles the tax exclusion for governmental retirement-plan distributions used by public safety officers to pay health and long-term care premiums from $3,000 to $6,000.
Official title: To amend the Internal Revenue Code of 1986 to increase the amount excluded from gross income by reason of distributions from governmental retirement plans for health and long-term care insurance for public safety officers.
Introduced May 13, 2025 by Donald J. Bacon · Last progress May 13, 2025
Increases the tax-exclusion limit for distributions from governmental retirement plans that public safety officers use to pay health and long-term care insurance premiums from $3,000 to $6,000. The change applies to distributions in taxable years beginning after December 31, 2025. The amendment modifies the Internal Revenue Code to expand tax-preferred treatment of such distributions, reducing taxable income for eligible public safety retirees who use retirement plan distributions to pay qualifying insurance premiums.