New legislation proposed in the U.S. House of Representatives aims to exempt military bonuses from federal income tax in an effort to boost military recruitment and retention.
The bipartisan legislation, titled the BONUS Act, has been introduced by Reps. Jen Kiggans, R-Va., and Sanford Bishop, D-Ga. It would ensure military members “receive 100% of their earned bonuses without penalty.”
Military bonuses are used to boost recruitment, retention and boost performance – they are also vital to helping service branches fill critical roles. Bonuses can widely range from a couple of thousand to tens of thousands of dollars. They can be paid in lump sums or distributed over time.
The lawmakers argue that subtracting significant portions due to federal income taxes is an “unfair burden.”
“Every day, members of our Armed Forces put their lives on the line to preserve our national security,” said Kiggans. “The men and women that serve in our nation’s military are the very reason the United States is the most dominant and effective military power in the world. The heroes who swear an oath to defend our way of life should not be punished at tax time for the bonuses they use to clothe, feed, and educate their spouses and children.”
The legislation says by excluding bonuses from taxable income, it will align “with broader efforts to improve military compensation and retention.” In addition, it will build on “existing tax exclusions for certain military benefits and responds to long-standing concerns raised by troops” and their families.
Sen. Richard Blumenthal, D-Conn., is leading companion legislation in the Senate. If passed in both chambers and signed by President Donald Trump, servicemembers would receive “the full benefit starting with bonuses paid on or after” Jan. 1, 2025.
