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Full Federal Income Tax Exemption for All Military Retirement Pay.

This law introduces a major change for veterans by completely excluding all military retirement pay and related benefits from Federal income tax. This means individuals receiving these benefits will keep a larger portion of their money, directly increasing their disposable income. These changes will take effect in the tax year following the law's enactment.
Key points
All military retirement and retainer pay will be exempt from Federal income tax.
The change also covers certain benefits related to disability or combat-related injuries, if not previously excluded.
Veterans and former service members will see an increase in their net income as their benefits become tax-free.
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Status:
Introduced
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Additional Information
Tax Cuts for Veterans Act of 2025
Print number: S 1108
Sponsor: Sen. Ricketts, Pete [R-NE]
Process start date: 2025-03-25