Congress moves to exempt all veteran retirement pay from federal income tax
S. 1108 — Tax Cuts for Veterans Act of 2025 · Filed by Pete Ricketts (R-NE) · 2 cosponsors · Introduced Mar 25, 2025 · Referred to committee
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What it does
This bill excludes all military retirement pay, disability compensation, and related benefits from federal income taxation for current and former members of the armed forces and uniformed services. Veterans would no longer owe federal income tax on retirement pensions, disability payments, or survivor benefits, creating a permanent tax exemption for these income streams.
Why we flagged it
The bill's sole operative mechanism is amending the Internal Revenue Code to exclude military retirement and disability income from gross income taxation. It is a straightforward tax policy change with no hidden riders or misdirection.
What the text implies
- Reduces federal tax revenue with no offsetting revenue source identified; fiscal impact depends on number of affected veterans and average benefit amounts, which are not quantified in the bill text.
- May create administrative complexity for the IRS in distinguishing taxable vs. non-taxable uniformed services income, particularly for individuals with mixed income sources.
- Expands existing partial tax exclusions (e.g., combat-related disability under IRC §104) into a blanket exemption, potentially affecting federal budget baseline and future tax policy negotiations.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
Veterans and their families receive direct financial relief through tax exemption on income they depend on for living expenses. The bill narrows the tax base but targets a specific population (military retirees and disabled veterans) whose service-related compensation is already partially tax-advantaged in some cases; full exemption represents a concrete benefit to this group without imposing new costs on other citizens.
Who stands to gain
- military retirees
- disabled veterans
- survivor beneficiaries of deceased service members
Named in the bill
Internal Revenue Code Section 122, Title 10 USC (Armed Forces), Title 14 USC (Coast Guard), Title 37 USC (Pay and Allowances), Title 38 USC (Veterans Benefits), IRS, Department of Defense, Department of Veterans Affairs
Where it stands
2 cosponsors: 2 Democrats.
- Mar 25, 2025 — Introduced · Congress.gov: “Introduced in Senate”
- Mar 25, 2025 — Referred to Senate Committee on Finance · Congress.gov: “Read twice and referred to the Committee on Finance”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
Money around this bill
1 lobbying clients named this bill on 1 disclosure filings across 1 quarter, Dec 2025 to Dec 2025. Those filings disclosed $700,000 in lobbying spend. A filing names 56 bills on average, so that figure is what each filing reported, not a share belonging to this bill.
More lobbying clients named this bill than 0% of bills with at least one filing.
Pete Ricketts, the sponsor, reported $1,983,558 in PAC receipts in the 2026 cycle.
- Associated Builders and Contractors Inc — $700,000 on 1 filing
Lobbying Disclosure Act filings through Jan 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (2,889 characters) on Jul 25, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Dec 2025 to Dec 2025. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jan 20, 2026 · page rendered 2026-10-20.
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