U.S. Rep. Brian Mast (R-FL) introduced legislation that would exempt from taxation all bonuses paid to members of the U.S. Armed Forces.
The No Tax on Military Bonuses Act, would exempt all taxes on the enlistment, reenlistment, retention or other incentive bonuses. Currently, service members are taxes on those bonuses at their marginal rate, but those deployed in combat zones are exempt from tax.
“Military service members raise their right hands to defend our country, and in return, they deserve to keep every cent of the bonus they earn,” Mast said. “This bill removes the unfair tax burden that has long affected military bonuses and keeps hard-earned money in the pockets of our soldiers, sailors, Airmen, Marines, and Guardians.”
Mast’s office said the legislation would ensure that all military bonuses are exempt from federal taxes, which would significantly reduce the financial strain on military families and address the challenges facing military men and women while serving the country. The bill would cover all bonuses paid by the Secretary of the Armed Forces to members who agree to reenlist, extend their service commitment, or accept a commission as an officer, Mast said.
The bill would not apply to gross income but would apply to “any agreement of the member to accept a commission as an officer, extend an active service commitment as an officer, enlist, reenlist or extend an enlistment as an enlisted member in an active or reserve component, or enter into a reserve affiliation agreement.”