A bill to amend the Internal Revenue Code of 1986 to exclude military bonuses from gross income.

This bill would expand the federal tax exclusion for military pay. It amends the Internal Revenue Code to exclude not only existing “qualified military benefits” from gross income, but explicitly also all “bonuses” paid to members of the uniformed services under chapter 5 of title 37, U.S. Code. In short, military bonuses would be treated as tax-free for federal income tax purposes. The change would apply to taxable years beginning after December 31, 2024 (i.e., starting with the 2025 tax year). Practical effect: service members receiving bonuses (such as reenlistment or retention bonuses) would not owe federal income tax on those payments, in addition to any other qualified military benefits that are already tax-excluded. Payroll taxes (like Social Security and Medicare) would not be affected by this bill unless separate changes are enacted.