If enacted, HB2670 will alter the approach to taxation of military income, effectively removing any active duty pay from taxable income calculations. This change would apply to taxable years beginning after December 31, 2024, creating a significant tax relief for military service members and improving their financial standings. The bill also mandates adjustments to withholding tables and procedures to reflect these changes, ensuring that both service members and government officials are prepared for the new tax implications.
Summary
House Bill 2670, known as the Fortifying Income by Giving our Heroes Their Earned-Tax Relief Act of 2025 (FIGHTER Act), seeks to amend the Internal Revenue Code of 1986 by exempting regular compensation received by members of the Armed Forces who are on active duty from being included in their gross income for tax purposes. This legislative effort aims to provide financial relief to military personnel, acknowledging their service and the sacrifices they make for the country.
Contention
While the bill is geared towards providing tax relief to military personnel, it may raise concerns related to its fiscal implications. Specifically, there is an expectation that the Department of Government Efficiency (DOGE) will implement measures to offset the reduction in federal revenues caused by the tax exemption. This could lead to debates over budget allocations and the prioritization of funding within military and governmental programs, sparking discussions on the sustainability of such tax breaks.
Federal Employee Combat Zone Tax Parity Act This bill excludes from gross income, for income tax purposes, the compensation of a federal employee who served in a combat zone or was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone. The bill terminates the exclusion two years after the end of combatant activities in such zone.