Sponsor
Michael Dennis Rogers
Representative · R-AL
Representative · R-AL
The bill raises take-home pay and clarifies tax rules for many overseas service members, but does so at the cost of reduced federal revenue and creates eligibility complexities that produce unequal treatment for some military personnel.
Members of the Armed Forces who served overseas will be able to exclude more pay from taxable income, increasing their after-tax take-home pay.
Service members and other taxpayers will have clearer tax rules because the bill defines 'overseas' and 'served overseas' and confirms that 'United States' includes territories, reducing uncertainty and the risk of IRS disputes or audits.
All taxpayers/the federal budget: expanding the exclusion reduces federal income tax revenue, which could increase the budget deficit or force reductions elsewhere in federal spending.
Some service members—those stationed abroad under a permanent change of station (PCS)—may be excluded from the PCS rule and face uneven eligibility, adding complexity and unequal tax treatment among military personnel.
Based on analysis of 2 sections of legislative text.
Expands the combat zone gross-income exclusion to cover Armed Forces members who "served overseas," defines "overseas" and excludes PCS-based service, effective for tax years after 2025.
Official title: To amend the Internal Revenue Code of 1986 to exclude from gross income the earnings from certain overseas deployments of members of the Armed Forces.
Introduced January 7, 2026 by Michael Dennis Rogers · Last progress January 7, 2026
Expands the current combat zone gross-income exclusion so that members of the Armed Forces who "served overseas" are eligible for the exclusion for enlisted personnel and commissioned officers. It defines "overseas" as any area outside the United States (including territories and possessions), excludes service overseas under permanent change of station (PCS) orders from the new "served overseas" definition, and makes the change effective for tax years starting after December 31, 2025.