No Tax on Bonuses Act of 2025
Summary
What This Bill Does
The No Tax on Bonuses Act amends Internal Revenue Code section 112 so gross income does not include a qualified bonus paid by the Secretary concerned to a member of the Armed Forces. Qualified bonuses include enlistment, accession, reenlistment, retention, incentive, and other bonuses paid in exchange for accepting a commission, extending an officer active-service commitment, enlisting, reenlisting, extending an enlistment in an active or reserve component, or entering a reserve affiliation agreement. The bill also makes conforming changes to wage withholding and cross-references and retitles section 112 to cover certain combat zone and other compensation of Armed Forces members. The exclusion applies to taxable years beginning after enactment.
Who Benefits and How
Service members receiving enlistment bonuses benefit because those bonuses would be excluded from gross income. Reenlisting enlisted members benefit because reenlistment and enlistment-extension bonuses would not be federally taxable income. Officers accepting commissions or extending active-service commitments benefit when qualifying incentive bonuses are excluded from income. Reserve component members benefit when reserve affiliation agreement bonuses qualify for the exclusion.
Who Bears the Burden and How
The Internal Revenue Service must administer a new section 112 qualified-bonus exclusion and conform wage-withholding rules. Defense payroll offices must identify qualified bonuses and adjust tax reporting for active and reserve service members. Federal taxpayers bear the revenue cost of excluding military bonuses from taxable income. Military compensation policy officials must coordinate bonus design with the new tax exclusion.
Key Provisions
- Provides an income-tax exclusion for qualified Armed Forces bonuses under section 112.
- Creates a qualified-bonus definition covering enlistment, accession, reenlistment, retention, incentive, officer commitment, enlistment-extension, and reserve affiliation bonuses.
- Amends withholding and cross-reference rules so the exclusion works in tax administration.
- Extends the bonus exclusion to taxable years beginning after enactment.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Excludes Armed Forces enlistment, accession, reenlistment, retention, incentive, and related service-commitment bonuses from gross income for taxable years beginning after enactment.
Key Policy Areas
Tax, Military, Service Member Benefits
Primary Purpose
Excludes Armed Forces enlistment, accession, reenlistment, retention, incentive, and related service-commitment bonuses from gross income for taxable years beginning after enactment.
Policy Domains
Resolution provisions
Identified Gains
- Service members receiving enlistment bonuses
- Reenlisting enlisted members
- Officers receiving incentive bonuses
- Reserve component members
Identified Costs
- Internal Revenue Service
- Defense payroll offices
- Federal taxpayers
- Military compensation officials
Sponsors
Legislative Progress
In CommitteeMr. Mast introduced the following bill; which was referred to …
Referred to the House Committee on Ways and Means.
Introduced in House
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Reserve component members, Service members receiving enlistment bonuses
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology