The Service Members Tax Relief Act would exempt active and reserve military service members from federal income tax on their military compensation. The exemption applies to pay earned from service in the U.S. Uniformed Services but does not include military pensions or retirement pay. This benefit would apply to all eligible service members going forward, starting with income earned in the first tax year after the bill becomes law. The legislation modifies the Internal Revenue Code to create a new tax exclusion category specifically for uniformed service compensation. No specific funding amounts or implementation timelines beyond the effective date are outlined in the bill.
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