Sponsors (2)
The bill makes tax treatment of death benefits for public-safety officers clearer and explicitly excludes payments to named beneficiaries (helping survivors), but it also risks leaving some former dependents newly taxable, creates retroactive liability and compliance disputes, and reduces federal revenue—trading targeted taxpayer relief and clarity for potential fairness, budgetary, and administrative costs.
Named beneficiaries (survivors of public-safety officers) will have life insurance and benefit-plan payments explicitly excluded from taxable income, lowering their federal tax burden when they receive death benefits.
Clarifying statutory terminology and explicitly defining who qualifies as a 'beneficiary' reduces uncertainty about tax treatment and can lower the risk of disputes with the IRS about whether such payments are taxable.
Explicit statutory coverage of life insurance and benefit-plan payments under §101(h)(1) gives beneficiaries and plan administrators more predictable, administrable tax treatment for these payments.
Former 'dependents' who are not explicitly designated as 'beneficiaries' may lose the tax exclusion and owe federal income tax on payments they previously expected to be tax-free.
Applying the change to taxable years beginning after Dec. 31, 2022 could create unexpected, retroactive tax liabilities for returns already filed for 2023 onward, forcing some taxpayers to amend returns or face assessments.
Expanding or clarifying the exclusion could reduce federal income tax revenue, modestly increasing deficits or reducing funds available for other government programs.
Based on analysis of 3 sections of legislative text.
Clarifies and expands federal tax exclusions so beneficiaries (including life-insurance beneficiaries) of public safety officers can exclude covered death benefits from taxable income.
Official title: Amend the Internal Revenue Code of 1986 to provide tax relief relating to public safety officers' death benefits, and for other purposes.
Introduced May 12, 2026 by Kirsten Gillibrand · Last progress May 12, 2026
Changes to the tax code expand and clarify which survivors and beneficiaries of public safety officers are excluded from taxable income. The bill replaces the term "surviving dependents" with "surviving beneficiaries" and adds beneficiaries of life insurance policies or benefit plans as explicit excluded recipients, effective for taxable years beginning after December 31, 2022.