H.R. 2565: No Tax on Bonuses Act of 2025

This bill, titled the No Tax on Bonuses Act of 2025, aims to amend the Internal Revenue Code in a way that would exclude certain financial bonuses received by members of the U.S. Armed Forces from their gross income for tax purposes. Here is a breakdown of what the bill proposes:

Key Provisions

• The main focus of the bill is to eliminate the taxation of "qualified bonuses" for military personnel.
• Qualified bonuses encompass any enlistment, reenlistment, retention, or incentive bonuses given to service members in exchange for commitments such as enlisting, reenlisting, or extending their service.
• The bill specifically defines "qualified bonuses" as payments made by the relevant military Secretary (e.g., Secretary of the Army) to service members who agree to extend or fulfill service commitments.

Detailed Definitions

• Qualified Bonus: This term includes a range of bonuses related to enlisting or serving actively or in reserve components of the military.
• Active Service: Refers to full-time military duty in the armed forces.
• Enlisted Member and Officer: These terms refer to individuals categorized as enlisted service members or as commissioned officers in the military.

Amendments to the Internal Revenue Code

• The bill proposes to amend Section 112 of the Internal Revenue Code by adding a new subsection that states that qualifying bonuses will not be included in gross income, therefore not taxable.
• Several conforming amendments are also included to ensure that the changes are integrated smoothly into existing legislation.

Effective Date

The exclusions related to taxation on these bonuses would be effective for taxable years starting after the bill is enacted.

Relevant Companies

None found.