S.1856 - To amend the Internal Revenue Code of 1986 to exclude military bonuses from gross income. (119th Congress)
Summary
S.1856 proposes an amendment to the Internal Revenue Code of 1986, specifically section 134, to exclude military bonuses from gross income. This means that bonuses paid to members of the uniformed services under chapter 5 of title 37, United States Code, would not be subject to federal income tax.
The bill stipulates that this amendment will be effective for taxable years beginning after December 31, 2024.
The bill was introduced in the Senate by Mr. Blumenthal and referred to the Committee on Finance.
Expected Effects
If enacted, S.1856 would reduce the tax burden on military personnel who receive bonuses. This could increase the disposable income of service members, potentially improving their financial well-being.
The change would also likely reduce federal tax revenue, requiring adjustments in other areas of the budget or potentially increasing the national debt.
The exclusion could serve as an incentive for military service and retention.
Potential Benefits
- Increased disposable income for military personnel receiving bonuses.
- Potential improvement in the financial well-being of service members.
- Enhanced attractiveness of military service, potentially aiding recruitment and retention efforts.
- Simplification of tax filing for service members by excluding bonuses from taxable income.
- Acknowledgment of the sacrifices and contributions of military personnel through a targeted tax benefit.
Most Benefited Areas:
Potential Disadvantages
- Reduced federal tax revenue, potentially requiring cuts in other government programs or increased borrowing.
- Potential for similar tax exclusion requests from other groups, leading to further revenue erosion.
- Complexity in defining and administering which bonuses qualify for the exclusion.
- Possible perception of unfairness by taxpayers who do not receive similar tax benefits.
- The benefit disproportionately favors those who receive bonuses, potentially creating disparities within the military.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the constitutional power of Congress to lay and collect taxes, as outlined in Article I, Section 8, Clause 1. Congress has broad authority to determine what constitutes taxable income and to create exemptions. The bill does not appear to infringe upon any specific constitutional rights or limitations.
However, the principle of equal protection under the law, while not explicitly mentioned, could be a point of consideration. The bill provides a specific benefit to a particular group (military personnel receiving bonuses), which could raise questions about fairness and whether it creates an undue advantage.
Ultimately, the constitutionality of the bill would likely depend on whether there is a rational basis for the distinction and whether it serves a legitimate government purpose, such as incentivizing military service.
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).