GRASSLEY IS LEAD REPUBLICAN ON BILL OFFERING TAX RELIEF, FAIRNESS FOR MILITARY MEN, WOMEN
Iowa Sen. Chuck Grassley is the lead Republican sponsor of bipartisan legislation introduced today to provide significant tax relief for American troops and their families. The Defenders of Freedom Tax Relief Act helps members of the military when they receive combat pay, save for retirement, or purchase their own homes. The bill also includes tax help for the employers of military reservists and for members of the National Guard who provide assistance to employees who are called to active duty.
"Military service makes taxes complicated and sometimes unfair," Grassley said. "People shouldn't suffer a tax hit to serve our country. We need to make sure military men and women have fair treatment under the tax code. It's a no-brainer."
The bipartisan bill includes tax relief for veterans, soldiers and their employers. Provisions in the legislation will:
Make permanent a provision that allows soldiers to count their non-taxable combat pay when figuring their eligibility for the earned income tax credit, a refundable federal income tax credit that puts cash in the hands of low-income working individuals and families.
Allow all veterans not just first-time home buyers to use qualified mortgage bonds to purchase their homes.
Cut taxes for small businesses when they continue paying some salary to members of the National Guard and Reserve who are called to duty.
Eliminate cumbersome rules for reporting of income when companies continue paying some salary to members of the National Guard and Reserve who are called to duty. This makes it easier for reservists to file their taxes and simpler for employers to keep contributing to those employees' retirement plans.
Allow the families of soldiers killed in the line of duty to contribute up to 100 percent of survivor benefits to a retirement savings account.
Allow active duty troops to withdraw money from retirement plans and give them two years to replace the funds without tax penalty.
Extend a provision that gives retired veterans more time to claim a tax refund on some types of disability benefit payments.
Make permanent a provision that gives intelligence service employees a longer period of time to meet residency requirements necessary to exclude profits from the sale of their home from capital gains tax, which is often necessary due to frequent deployment.
Give the IRS the authority to treat gifts of thanks from states to veterans such as payments of excess state revenue as nontaxable gifts.
Grassley introduced the bill with Sen. Max Baucus, the Democratic chairman of the Finance Committee, with jurisdiction over tax policy, and 12 other members of the committee. More details on the bill's provisions are available at finance.senate.gov. The committee is likely to formally consider the Defenders of Freedom Tax Relief Act this month.