Sponsors (9)
Introduced November 20, 2025 by Abraham J. Hamadeh · Last progress November 20, 2025
The bill increases after-tax income for veterans, retirees, and survivors by excluding certain military-related payments from taxable income, at the cost of reduced federal revenue and some unequal treatment across different uniformed services.
Veterans and retired service members will no longer pay federal income tax on military retired/retainer pay and certain disability or combat-related payments, increasing their after-tax income.
Survivors and families of deceased service members will not owe federal income tax on survivor payments, increasing the net benefits received by military families.
Federal budget and taxpayers will receive less revenue because taxable income is reduced by these exclusions, which could modestly increase deficits or reduce funding available for other programs.
Members of certain non-Armed Forces uniformed services may face unequal tax treatment because the special-rule scope is narrowed, complicating tax planning and creating potential perceptions of unfairness.
Based on analysis of 2 sections of legislative text.
Excludes most military retired pay and specified disability/combat-related and survivor payments from federal gross income, with conforming statutory edits.
Removes most military retirement and related disability or survivor payments from federal taxable income. It broadens the existing income exclusion so that retired or retainer pay under title 10 or 14 and many monthly compensation, pension, annuity, or allowance payments tied to disability, combat injury, or death under titles 10, 14, 37, or 38 are not included in gross income for federal income tax purposes. Makes technical and conforming changes to related tax and military-pay statutes, preserves a special rule for certain reduced uniformed services retirement pay for non‑Armed Forces uniformed services, and is effective for taxable years beginning after enactment.