Kiggans Introduces BONUS Act to End Federal Tax on Military Bonuses

WASHINGTON, DC – Today, Congresswoman Jen Kiggans (VA-02) and Congressman Sanford Bishop (GA-02), the co-chairs of the Military Family Caucus, introduced the BONUS Act, a bipartisan bill that would exempt military bonuses from federal income tax. This bill ensures that servicemembers receive 100% of their earned bonuses without penalty.

Right now, servicemembers who earn bonuses for enlisting, reenlisting, or excelling in their duties often see a significant portion of those incentives lost to federal taxes. The BONUS Act addresses this unfair burden and ensures that the financial rewards meant to strengthen our force actually reach the men and women who’ve earned them.

“Every day, members of our Armed Forces put their lives on the line to preserve our national security,” said Congresswoman Kiggans. “The men and women that serve in our nation’s military are the very reason the United States is the most dominant and effective military power in the world. The heroes who swear an oath to defend our way of life should not be punished at tax time for the bonuses they use to clothe, feed, and educate their spouses and children. That’s why I am proud to introduce the BONUS Act, alongside my Military Family Caucus co-chair Rep. Sanford Bishop, to let our servicemembers keep every dollar that they have earned.”

“Our servicemembers put their lives on the line and often work in extreme conditions to train and defend our county,” said Congressman Sanford Bishop. “One way we can thank these hard-working men and women and encourage talent to continue serving is by providing a small bonus or incentive pay. This bill would exempt these bonuses from federal income tax and allow our servicemembers and their families to keep more of their hard-earned pay. The BONUS Act is a show of respect for the sacrifices they make on behalf of all Americans, and I am proud to lead this bill with my colleague and bipartisan Congressional Military Family Caucus co-chair, Congresswomen Kiggans.”

The BONUS Act is led in the Senate by Senator Richard Blumenthal of Connecticut.

You can find the full text of this bill here.

You can find a one pager on this bill here.

Background:
• Military bonuses- including enlistment, retention, and performance-based incentives- are critical tools for recruitment and force readiness.
• Currently, these bonuses are subject to federal income tax, reducing their intended impact and shortchanging service members.
• The BONUS Act fixes this by clarifying that such payments are excluded from taxable income, aligning with broader efforts to improve military compensation and retention.
• The bill builds on existing tax exclusions for certain military benefits and responds to long-standing concerns raised by troops, families and advocated who believe those who serve should not be taxed on the bonuses they earn in service to our country.

Specifically, this legislation would:
• The bill ensures that bonuses given to servicemembers—like enlistment or retention bonuses—won’t be taxed by the federal government.
• Servicemembers will begin to see the full benefit starting with bonuses paid on or after January 1, 2025.