No Tax on Drill Pay Act

Plain-English Summary: No Tax on Drill Pay Act

This bill would eliminate federal income taxes on the "drill pay" earned by members of the National Guard and military reserves. Drill pay refers to the wages that part-time service members receive when they attend their required monthly training weekends and annual training periods — typically two days per month plus two weeks per year. Under current law, this pay is subject to federal income tax like most other forms of income.

The bill would directly benefit the roughly 800,000 Americans who serve in the National Guard and military reserve components, such as the Army Reserve, Navy Reserve, Air Force Reserve, Marine Corps Reserve, and Coast Guard Reserve. These are people who hold regular civilian jobs but also commit time to military service on a part-time basis. By removing the federal tax on their drill pay, the bill would allow them to keep more of the money they earn from that service.

The trade-off is that the federal government would collect less tax revenue as a result of this change. The exact cost to the federal budget would depend on how many reservists and Guard members are affected and what tax brackets they fall into. The bill has been referred to the House Committee on Ways and Means, which oversees tax-related legislation, where it will be reviewed before any further action is taken.