H.R. 823: Heroes’ Tax Exemption Act of 2025

This bill, known as the Heroes’ Tax Exemption Act of 2025, aims to amend the Internal Revenue Code to provide an income tax exemption for active duty servicemembers in the Armed Forces. Below are the main components of the bill:

Income Tax Exemption for Servicemembers

The bill proposes that:

• Gross Income Exclusion: Any income earned by an active duty member of the Armed Forces would not be included in their gross income for federal income tax purposes. This means that servicemembers would not have to pay federal income taxes on their income during their time in active duty.

Placement in the Tax Code

The bill also includes specific changes to the Internal Revenue Code:

• New Section Addition: The legislation adds a new section (Section 139J) to the Internal Revenue Code, specifically referencing the income earned by servicemembers.
• Clerical Amendment: A clerical update will be made to the table of sections within the tax code to include this new section.

Effective Date

The tax exemption would not take effect immediately; instead, it is set to apply to income earned after the second October 1 following the enactment of the bill. This means that there would be a delay before the exemption could be utilized by servicemembers.

Summary of Impacts

If the bill is passed, it would significantly reduce the tax burden on active duty servicemembers by exempting their earnings from federal income tax, potentially increasing their disposable income while serving.

Relevant Companies

None found.