In a rare show of bipartisan unity, lawmakers in the House have introduced a new bill that would exempt military bonuses from federal taxes, aiming to boost financial support for service members and their families.
The bill, dubbed the BONUS Act, would remove federal taxation on enlistment, reenlistment, and performance bonuses for members of the U.S. Armed Forces.
This legislation comes at a time when policymakers across the aisle are seeking meaningful ways to recognize the sacrifices of American troops and address the growing challenges associated with military recruitment and retention.
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Currently, service members deployed in combat zones benefit from tax-free income, but those same tax exemptions do not apply to bonuses earned stateside.
The BONUS Act would change that, putting more money directly into the hands of military families—an especially important measure given the rising cost of living and the unique burdens that come with military life.
“Every day, members of our Armed Forces put their lives on the line to preserve our national security,” said Rep. Jen Kiggans (R-Va.), who is co-sponsoring the bill.
“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.”
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Rep. Kiggans, a Navy veteran herself, serves as co-chair of the House Military Family Caucus alongside Rep. Sanford Bishop (D-Ga.), a longtime advocate for military personnel and families.
The bipartisan nature of the bill is a strategic advantage in the highly polarized House of Representatives, giving it a better chance of passing than previous single-party efforts.
A similar measure was introduced last month by a Republican lawmaker from Florida, but its prospects were limited without bipartisan sponsorship.
With Kiggans and Bishop now leading the charge, the BONUS Act has renewed momentum.
Aiming for Retention Through Relief
The bill specifically targets bonuses earned after December 31, 2024, and would amend a key section of the federal tax code.
While the bonuses themselves aren’t new, the tax relief would be, making the military a more financially attractive option—especially for younger enlistees weighing their career paths.
Rep. Bishop emphasized the importance of the measure not only as a gesture of gratitude but also as a strategic tool for keeping skilled personnel in uniform.
“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,” Bishop said.
Although the Pentagon reported earlier this year that junior enlisted troops often earn more than their civilian counterparts with comparable education and experience, experts argue that raw compensation numbers don’t tell the whole story.
The lifestyle associated with military service—frequent moves, high stress, deployments, and exposure to danger—requires a more nuanced look at what constitutes “competitive compensation.”
At a time when military recruiters are struggling to meet enlistment goals, particularly in younger demographics, offering tax-free bonuses could be a powerful incentive.
However, there’s some irony in the timing: both the Army and Air Force have recently begun dialing back their enlistment bonuses due to unexpectedly high retention rates, driven in part by a soft job market and strong internal morale programs.
Senate Support and Next Steps
The BONUS Act is not confined to the House. A companion bill is already in the works in the Senate, spearheaded by Sen. Richard Blumenthal (D-Conn.), the top Democrat on the Senate Veterans Affairs Committee.
With growing bipartisan support in both chambers, the bill’s backers are hopeful it will gain traction and move toward becoming law.
If passed, the measure would mark a significant shift in how the federal government treats military compensation—and could pave the way for further reforms aimed at improving the lives of those who serve.
As lawmakers continue to debate military budgets, benefits, and readiness, the BONUS Act serves as a rare example of consensus: an acknowledgment that those who serve deserve more than just thanks—they deserve tangible financial support.
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