Bill Summary
The "Service Members Tax Relief Act" is a proposed legislation aimed at providing tax relief to active and reserve service members of the United States Uniformed Services. Specifically, the bill seeks to amend the Internal Revenue Code of 1986 to exempt certain types of compensation received by these service members from being counted as taxable income. This exemption does not extend to pension or retirement pay. The legislation is intended to take effect for taxable years beginning after its enactment, thereby reducing the tax burden on uniformed service members actively serving in the military.
Possible Impacts
The "Service Members Tax Relief Act" could affect people in the following ways:
1. **Increased Disposable Income for Service Members**: By exempting certain income earned by active and reserve service members from federal income tax, the legislation would increase the disposable income of these individuals. This could enhance their financial stability and allow for greater spending on necessities, savings, or investments, ultimately improving their quality of life and financial well-being.
2. **Encouragement for Military Recruitment and Retention**: The tax exemption may serve as an incentive for individuals to join or remain in the military. By providing a financial benefit through tax relief, this legislation could help the military attract new recruits and retain current service members, thus supporting the overall strength and readiness of the armed forces.
3. **Impact on State and Local Economies**: As service members retain more of their income due to the tax exemption, they may contribute more to their local economies through increased spending. This could benefit local businesses and services, potentially leading to job creation and economic growth in communities with a significant military presence. Additionally, the legislation could help alleviate some financial pressures on service member families, leading to a greater sense of well-being within those communities.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3246 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 3246
To amend the Internal Revenue Code of 1986 to exempt certain income of
active or reserve service members from tax.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 20, 2025
Mr. Ricketts introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to exempt certain income of
active or reserve service members from tax.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Service Members Tax Relief Act''.
SEC. 2. EXEMPTION FROM INCOME TAX FOR UNIFORMED SERVICE MEMBERS.
(a) In General.--Part III of subchapter B of chapter 1 of subtitle
A of the Internal Revenue Code of 1986 is amended by inserting after
section 139L the following new section:
``SEC. 139M. CERTAIN INCOME EARNED BY UNIFORMED SERVICE MEMBERS.
``(a) In General.--Gross income shall not include any compensation
received by an individual in connection with such individual's service
during the taxable year as an active or reserve member of the Uniformed
Services of the United States.
``(b) Exclusion of Retirement Income.--For purposes of this
section, the term `compensation' does not include any pension or
retirement pay.''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of subtitle A of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 139L
the following new item:
``Sec. 139M. Certain income earned by uniformed service members.''.
(c) Effective Date.--The amendments made by this section shall
apply to income earned in taxable years beginning after the date of the
enactment of this Act.
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