H.R. 6970: To amend the Internal Revenue Code of 1986 to exclude from gross income the earnings from certain overseas deployments of members of the Armed Forces.

This bill proposes changes to the Internal Revenue Code to provide tax relief for certain members of the Armed Forces who are deployed overseas. The key features of the bill are as follows:

Expanded Tax Exclusion for Overseas Service

The bill amends existing tax laws to expand the combat zone tax exclusion to include earnings from deployments in specific overseas locations. This means that service members who earn income while serving outside of the U.S. would not have to count that income when calculating their gross taxable income.

Specific Provisions

• For Enlisted Personnel: The bill modifies Section 112(a) of the Internal Revenue Code to allow enlisted personnel to qualify for a tax exclusion on income earned while serving overseas.
• For Commissioned Officers: Similarly, Section 112(b) is updated to extend the same tax exclusion to commissioned officers serving overseas.

Definitions Added

New definitions are introduced in Section 112 to clarify terms related to the legislation:

• The term “overseas” is defined as any area outside the United States.
• “Served overseas” does not include periods when personnel are on permanent change of station orders.
• The term “United States” is expanded to include U.S. territories and possessions.

Conforming Amendments

To align with the new provisions, the bill makes changes to the headings and tables in the tax code, specifying that Section 112 now also pertains to overseas service compensation for military personnel.

Effective Date

The changes proposed by this bill would take effect for taxable years beginning after December 31, 2025.

Relevant Companies

None found