Lejeune Untaxed Compensation and Settlements Act of 2025
Summary
The Lejeune Untaxed Compensation and Settlements Act of 2025 aims to amend the Internal Revenue Code to exclude damages received from lawsuits related to the Camp Lejeune Justice Act of 2022 from gross income. This means that individuals who receive compensation for harm suffered due to water contamination at Camp Lejeune would not have to pay federal income taxes on those amounts. The bill specifically amends Section 104(a) of the Internal Revenue Code of 1986 to include this exclusion.
Expected Effects
The primary effect of this bill, if enacted, would be to provide tax relief to individuals and families who have received or will receive compensation related to the Camp Lejeune Justice Act. This would effectively increase the net amount of compensation received by these individuals. The change would apply to damages received after the enactment date of the Act.
Potential Benefits
- Provides financial relief to those harmed by the Camp Lejeune water contamination.
- Ensures that the full amount of compensation is available to cover medical expenses and other related costs.
- Simplifies the tax filing process for recipients of Camp Lejeune settlements.
- Could stimulate local economies as recipients spend their compensation.
- Aligns with the principle of compensating victims without further burdening them with taxes.
Potential Disadvantages
- May reduce federal tax revenue, although the amount is likely to be relatively small.
- Could be perceived as providing special tax treatment to a specific group of individuals.
- May create a precedent for excluding other types of settlements from gross income in the future.
- The administrative burden of implementing and tracking these exclusions could pose a challenge to the IRS.
- Some may argue that all compensation should be subject to taxation, regardless of the circumstances.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble), as it seeks to provide relief to individuals harmed by government actions. Congress has the power to lay and collect taxes (Article I, Section 8), but also has the authority to make exceptions and define what constitutes taxable income. The bill does not appear to infringe on any specific constitutional rights or limitations.
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).