The Tax Cuts for Veterans Act of 2025 would exclude all military retirement pay and related benefits from federal income taxes for veterans and former service members. Currently, some military retirement income is subject to federal tax, but this bill would eliminate that tax burden entirely for both armed forces members (such as Army, Navy, and Air Force retirees) and members of other uniformed services who receive retirement or disability-related compensation under federal law. The bill applies to retirement pay, pensions, annuities, and disability or combat-related compensation paid under various federal statutes. The changes would take effect for tax years beginning after the bill is signed into law, with no specific appropriation or sunset date mentioned. This legislation would primarily benefit the hundreds of thousands of military retirees and disabled veterans across the country by reducing their federal tax obligations.
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