“A bill 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 paid under title 10 or 14, U.S. Code, to members or former members of the armed forces; and (2) amounts not already excluded under IRC §104(a)(4) (i.e., certain military disability payments) received as monthly compensation, pension, pay, annuity, or allowance under titles 10, 14, 37, or 38, U.S. Code, in connection with a disability, combat-related injury or disability, or death of an armed forces member. The section further excludes from gross income, for members or former members of other uniformed services (i.e., commissioned corps of the National Oceanic and Atmospheric Administration and Public Health Service), the amount of any reduction in retired or retainer pay under chapter 73 of title 10, U.S. Code (Survivor Benefit Program), subject to basis recovery rules for pre-1966 reductions and certain deposits. (Thus, all military retired pay—which is currently taxable—becomes fully excludable federally.) The section also repeals 10 U.S.C. §1403 (previously concerning certain annuity elections); makes conforming amendments to IRC §72(n) and the relevant table of sections; and applies to taxable years beginning after enactment.