H.R.823 - Heroes’ Tax Exemption Act of 2025 (119th Congress)
Summary
H.R.823, the Heroes' Tax Exemption Act of 2025, proposes amending the Internal Revenue Code of 1986 to exempt active duty members of the Armed Forces from income tax. The bill was introduced in the House of Representatives by Mr. Van Drew and referred to the Committee on Ways and Means. The exemption would apply to income earned after the second October 1 following the enactment of the Act.
Expected Effects
If enacted, this bill would reduce the tax burden on active duty servicemembers. This could increase their disposable income and potentially improve their financial well-being. However, it would also reduce federal tax revenue, potentially impacting government programs and the national debt.
Potential Benefits
- Increased disposable income for active duty servicemembers, potentially improving their financial stability.
- Potential boost to morale and retention within the Armed Forces.
- Recognition of the sacrifices made by servicemembers.
- Simplified tax filing for active duty military personnel.
- Could stimulate local economies near military bases as servicemembers have more money to spend.
Most Benefited Areas:
Potential Disadvantages
- Reduced federal tax revenue, potentially leading to cuts in other government programs or increased national debt.
- Potential for inequities if other groups are not similarly exempted from income tax.
- Increased complexity in the tax code due to the creation of a new exemption.
- Possible administrative costs associated with implementing and managing the new exemption.
- The benefit may disproportionately favor higher-ranking officers with larger incomes.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the power of Congress to lay and collect taxes, as outlined in Article I, Section 8, Clause 1 of the Constitution. The Constitution grants Congress the power to provide for the common defense and general welfare of the United States. Tax exemptions are a tool Congress can use to incentivize service in the armed forces, which aligns with the common defense objective. However, the uniformity clause might be invoked if the exemption is deemed unfairly discriminatory.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).