No Tax on Bonuses Act of 2025

This bill, known as the "No Tax on Bonuses Act of 2025," proposes to amend the Internal Revenue Code of 1986 to provide a significant tax benefit for members of the United States Armed Forces. Its primary purpose is to exclude certain military bonuses from gross income , thereby making these payments tax-free for service members. The legislation introduces a new subsection to Section 112 of the Code, specifying that "gross income does not include a qualified bonus." A qualified bonus is broadly defined to include enlistment, accession, reenlistment, retention, incentive, or other bonuses paid by the Secretary concerned to a service member. These bonuses are typically provided in exchange for agreements such as accepting a commission, extending active service, enlisting, reenlisting, or extending an enlistment in active or reserve components, or entering a reserve affiliation agreement. The amendments would apply to taxable years beginning after the bill's enactment.