A bipartisan House bill would remove federal taxes from military bonuses.
The bill, nicknamed the BONUS Act, would exempt servicemembers’ enlistment, reenlistment, and performance bonuses from being taxed by the federal government. Service members in combat zones already benefit from tax-free income during their deployments, but the proposed legislation would put more cash into military families’ pockets at home.
The bipartisan bill introduced this week is sponsored by Reps. Jen Kiggans (R-Va.) and Sanford Bishop (D-Ga.) who are co-chairs of the House Military Family Caucus. A similar bill was introduced by a Florida Republican last month, but the bipartisan bills generally have a better chance of passing, especially in the highly partisan House.
“Every day, members of our Armed Forces put their lives on the line to preserve our national security,” Kiggans said in a release. “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 would amend a section of the federal tax code and apply to any bonuses earned after Dec. 31, 2024.
A report released by the Pentagon in January found that junior enlisted troops bring home more pay than their civilian peers with similar work and education levels. However, experts have pointed to the tough recruiting environment and added stress of military service — frequent moves, deployments, and hazardous jobs — as a reason to consider what “competitive compensation” looks like for young troops.
Bishop, the bill’s co-sponsor, said in a release that removing taxes on military bonuses would be another way to retain troops. However, in the last month, the Army and Air Force have started reducing their enlistment incentives because of the high levels of retention.
“One way we can thank these hard-working men and women and encourage talent to continue serving is by providing a small bonus or incentive pay,” Bishop said.
A Senate version of the bill is being sponsored by Sen. Richard Blumenthal (D-Conn.), who is the head Democrat on the Senate Veterans Affairs committee.
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