“To amend the Internal Revenue Code of 1986 to exclude all military retirement and related benefits from Federal income tax.”
No CRS summary available for this bill.
This section amends IRC §122 to exclude from gross income (1) retired or retainer pay under 10 U.S.C. titles 10 or 14 received by members or former members of the armed forces (as defined in 10 U.S.C. §101(4), i.e., Army, Navy, Air Force, Marine Corps, Space Force, and Coast Guard) and (2) monthly compensation, pensions, pay, annuities, or allowances under 10 U.S.C. titles 10, 14, 37, or 38 for disability or combat-related injury or disability or death of armed forces members (if not already excluded under IRC §104(a)(4)). It further excludes from gross income, for members or former members of the uniformed services other than the armed forces (as defined in 10 U.S.C. §101(5), i.e., including commissioned corps of NOAA and Public Health Service), the amount of any reduction in retired or retainer pay under 10 U.S.C. chapter 73, with a special rule excluding all such pay until the excluded amount equals the "consideration for the contract" (i.e., pre-1966 reductions elected under chapter 73 and deposits under 10 U.S.C. §§1438 or 1452(d)). (Thus, this expands prior partial exclusions for disability pay to full nontaxability of armed forces retirement pay, which is currently included in gross income.) The section repeals 10 U.S.C. §1403 (previously excluding certain military retirement amounts from income); amends IRC §72(n) to apply its annuity rules only to non-armed forces uniformed services members; updates the table of sections for IRC part III; and applies to taxable years beginning after enactment.