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House Bill 6190HR 6190

Tax Cuts for Veterans Act of 2025

Taxation

4 pages

house
senate
president

Introduced November 20, 2025 by Abraham J. Hamadeh · Last progress November 20, 2025

Bill Summary

Summary

Excludes most military retirement pay, retainer pay, and certain disability, combat-related, and survivor payments from federal gross income, so those amounts are not taxed for taxable years beginning after enactment. It rewrites the Internal Revenue Code provision on military retirement (26 U.S.C. §122), makes conforming changes to related tax and title 10 provisions, and repeals a legacy provision in title 10. The change raises after-tax income for many veterans, retirees, disabled service members, and survivors and will reduce federal income tax receipts; it requires updates to tax forms, IRS guidance, and how the Department of Defense and other uniformed services report payments for tax purposes.

Key Points

Rewrites 26 U.S.C. §122 to exclude most military retirement and related benefits from federal gross income.
Excludes retired or retainer pay under title 10 (Armed Forces) and title 14 (Coast Guard) from taxable income.
Excludes monthly compensation, pension, pay, annuity, or allowance under titles 10, 14, 37, or 38 for disability, combat-related injury/disability, or death.
Creates a special rule for uniformed services members other than Armed Forces that limits excluded retired pay until it equals the defined "consideration for the contract."
Adopts definitions of "Armed Forces" and "uniformed services" from 10 U.S.C. §101 and repeals 10 U.S.C. §1403.
Changes are effective for taxable years beginning after enactment (not retroactive).
Will increase after-tax income for many veterans, disabled service members, retirees, and survivors and reduce federal income tax revenue.
Requires IRS guidance and administrative coordination with the Department of Defense and other uniformed services for reporting and compliance.
Does not appropriate funds or create a new program; it is a tax code change with budgetary implications.

Pros & Cons

The bill delivers targeted federal tax relief and clearer rules for military retirees and certain uniformed-service members, at the cost of reduced federal revenue and added administrative complexity, with benefits limited to tax years after enactment.

Potential Benefits

2

Veterans, retired service members, and certain uniformed-service personnel: military retirement pay, disability and combat-related benefits (and specified reductions in retired/retainer pay) are excluded from federal taxable income, directly lowering tax liability for these individuals.
Veterans and service retirees: adopting 10 U.S.C. §101 definitions and updating cross-references clarifies eligibility and reduces tax filing uncertainty, simplifying compliance and potentially lowering the need for paid tax assistance.

Potential Drawbacks

3

All taxpayers and the federal budget: excluding substantial military retirement and disability pay from taxable income reduces federal income tax revenue, which could increase budget pressure or force reductions/delays in other government programs.
Veterans and retirees who already paid taxes: the change is effective only for taxable years after enactment, so taxpayers will generally not get refunds for prior years’ taxes paid on amounts now excluded.
Veterans, retirees, tax preparers, and the IRS: special-rule calculations (for example, determining the "consideration for the contract" and handling pre-1966 reductions/deposits) add administrative complexity and will likely require IRS guidance and extra tax-preparation assistance.

AI Insights

Analyzed 2 of 2 sections

Categories & Tags

Agencies

Department of Defense (implicit via title 10 references)

Subjects

Procedural Corrections

Individual Income Tax

Affected Groups

Veterans

Military Personnel

Seniors & Retirees

Taxpayers

Sponsors (9)

Bill Summary

Summary

Excludes most military retirement pay, retainer pay, and certain disability, combat-related, and survivor payments from federal gross income, so those amounts are not taxed for taxable years beginning after enactment. It rewrites the Internal Revenue Code provision on military retirement (26 U.S.C. §122), makes conforming changes to related tax and title 10 provisions, and repeals a legacy provision in title 10. The change raises after-tax income for many veterans, retirees, disabled service members, and survivors and will reduce federal income tax receipts; it requires updates to tax forms, IRS guidance, and how the Department of Defense and other uniformed services report payments for tax purposes.

Key Points

Rewrites 26 U.S.C. §122 to exclude most military retirement and related benefits from federal gross income.
Excludes retired or retainer pay under title 10 (Armed Forces) and title 14 (Coast Guard) from taxable income.
Excludes monthly compensation, pension, pay, annuity, or allowance under titles 10, 14, 37, or 38 for disability, combat-related injury/disability, or death.
Creates a special rule for uniformed services members other than Armed Forces that limits excluded retired pay until it equals the defined "consideration for the contract."
Adopts definitions of "Armed Forces" and "uniformed services" from 10 U.S.C. §101 and repeals 10 U.S.C. §1403.
Changes are effective for taxable years beginning after enactment (not retroactive).
Will increase after-tax income for many veterans, disabled service members, retirees, and survivors and reduce federal income tax revenue.
Requires IRS guidance and administrative coordination with the Department of Defense and other uniformed services for reporting and compliance.
Does not appropriate funds or create a new program; it is a tax code change with budgetary implications.

Pros & Cons

The bill delivers targeted federal tax relief and clearer rules for military retirees and certain uniformed-service members, at the cost of reduced federal revenue and added administrative complexity, with benefits limited to tax years after enactment.

Potential Benefits

2

Veterans, retired service members, and certain uniformed-service personnel: military retirement pay, disability and combat-related benefits (and specified reductions in retired/retainer pay) are excluded from federal taxable income, directly lowering tax liability for these individuals.
Veterans and service retirees: adopting 10 U.S.C. §101 definitions and updating cross-references clarifies eligibility and reduces tax filing uncertainty, simplifying compliance and potentially lowering the need for paid tax assistance.

Potential Drawbacks

3

All taxpayers and the federal budget: excluding substantial military retirement and disability pay from taxable income reduces federal income tax revenue, which could increase budget pressure or force reductions/delays in other government programs.
Veterans and retirees who already paid taxes: the change is effective only for taxable years after enactment, so taxpayers will generally not get refunds for prior years’ taxes paid on amounts now excluded.
Veterans, retirees, tax preparers, and the IRS: special-rule calculations (for example, determining the "consideration for the contract" and handling pre-1966 reductions/deposits) add administrative complexity and will likely require IRS guidance and extra tax-preparation assistance.

AI Insights

Analyzed 2 of 2 sections

Categories & Tags

Agencies

Department of Defense (implicit via title 10 references)

Subjects

Procedural Corrections

Individual Income Tax

Affected Groups

Veterans

Military Personnel

Seniors & Retirees

Taxpayers

All Legislation

House Bill 6190HR 6190

Tax Cuts for Veterans Act of 2025

Taxation

4 pages

house
senate
president

Introduced November 20, 2025 by Abraham J. Hamadeh · Last progress November 20, 2025

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