S.1108 - Tax Cuts for Veterans Act of 2025 (119th Congress)
Summary
The Tax Cuts for Veterans Act of 2025, introduced as S.1108 in the Senate, aims to amend the Internal Revenue Code of 1986 to exclude all military retirement and related benefits from federal income tax. This bill specifically targets retired or retainer pay and other compensation received in connection with disability, combat-related injury, or death of a service member. The proposed changes would apply to taxable years beginning after the enactment of the Act.
Expected Effects
If enacted, this bill would reduce the tax burden on military retirees and those receiving benefits related to military service. It would also reduce federal tax revenue, potentially impacting the federal budget. The bill would amend Section 122 of the Internal Revenue Code and repeal Section 1403 of Title 10, United States Code.
Potential Benefits
- Provides financial relief to veterans and their families by reducing their tax burden.
- Recognizes the sacrifices made by military personnel.
- Could improve the financial well-being of veterans, potentially reducing reliance on other government assistance programs.
- Simplifies the tax code for military retirement benefits.
- May encourage longer military service by making retirement benefits more attractive.
Most Benefited Areas:
Potential Disadvantages
- Reduces federal tax revenue, potentially increasing the national debt or requiring cuts in other government programs.
- Could disproportionately benefit higher-ranking officers with larger retirement incomes.
- May create a need to adjust other tax policies to compensate for the revenue loss.
- The cost of the tax cut may be substantial, requiring careful consideration of budget implications.
- Could be perceived as unfair by other groups who do not receive similar tax exemptions.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution (Preamble), as it aims to support veterans. Congress has the power to lay and collect taxes (Article I, Section 8), and also the implied power to create exemptions and deductions. The bill does not appear to infringe on any specific constitutional rights or protections.
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).