Military Pension Protection Act

Key Points

• This bill would make all military retirement pensions completely tax-free at the federal level. Any pension or annuity from the federal government for Armed Forces service would be excluded from gross income, meaning veterans would no longer owe federal income tax on that money.
• The tax exemption covers not just veterans themselves but also their beneficiaries, such as surviving spouses or children who receive pension payments after a veteran passes away. This broadens the financial relief beyond just the service member.
• The bill works by adding a new Section 113 to the Internal Revenue Code, placed right after the existing Section 112, which already excludes combat zone pay from taxes. This would create a permanent change to the tax code.
• The changes would kick in for tax years starting after the bill becomes law. So if signed midyear, the benefit would likely begin with the following full tax year.
• The bill was introduced by Rep. Van Drew and referred to the House Ways and Means Committee. As a tax bill, it faces a long road through Congress and would reduce federal tax revenue, likely sparking debate about the cost.