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Standard Summary
Comprehensive overview in 1-2 paragraphs
The BNA Fairness Act would make the Basic Needs Allowance (BNA) paid to members of the U.S. Armed Forces tax-free by adding the BNA to the list of “qualified military benefits” that are excluded from gross income under the federal income tax system. Specifically, the bill amends the Internal Revenue Code to include the basic needs allowance, defined through the U.S. Code reference that governs military pay (as it exists when the allowance is provided), in Section 134(b)’s list of benefits that are not subject to federal income tax. The change is prospective, applying to taxable years ending after enactment. In short, service members who receive BNA would not owe federal income tax on that portion of their pay.
Key Points
- 1Adds the basic needs allowance (BNA) to the set of benefits that are excluded from gross income for federal tax purposes.
- 2BNA is defined as a “qualified military benefit” under 37 U.S.C. § 402b, using the version of that law in effect at the time the allowance is provided.
- 3The bill includes a conforming technical amendment to ensure the internal cross-references in Section 134(b) remain consistent with the new provision.
- 4Effective date: the tax exclusion applies to taxable years ending after the enactment date.
- 5Sponsorship: Introduced in the House by Rep. Womack, with Rep. Moulton and Rep. Wittman as co-sponsors.
Impact Areas
Primary group/area affected: Members of the U.S. Armed Forces who receive the Basic Needs Allowance; they would see federal income tax exempted on BNA payments, potentially increasing take-home pay or reducing withholding.Secondary group/area affected: The Internal Revenue Service (IRS) and payroll/tay withholding processes would need to implement and reflect the tax exclusion for BNA on affected paychecks and tax forms.Additional impacts: Potential implications for federal tax revenue (reduced taxable income for those receiving BNA), and possible effects on compensation planning within the Department of Defense if BNA is used as part of overall compensation strategy. There is no stated impact on state taxes in the bill, which addresses federal income tax.
Generated by gpt-5-nano on Nov 18, 2025