Courtesy of NAEA
Finance Members Introduce Military Tax Relief Bill
Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Chuck Grassley (R-IA) this week introduced legislation that would grant significant tax breaks to members of the military, veterans, and their families. S. 1593, the Defenders of Freedom Tax Relief Act of 2007, would:
Make permanent a provision that allows soldiers to count their non-taxable combat pay when figuring their eligibility for the earned income tax credit.
Allow all veterans—not just first-time homebuyers—to use qualified mortgage bonds to purchase their homes.
Allow a credit for small businesses that continue paying some salary to members of the National Guard and Reserve who are called to duty.
Allow the families of soldiers killed in action to contribute survivor benefits to a retirement account.
Allow active duty service members to withdraw money from retirement plans and give them two years to replace the funds without tax penalty
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 a home from capital gains tax.
Give the IRS the authority to treat gifts of thanks from states to veterans—such as payments of excess state revenue—as nontaxable gifts.
The bill is cosponsored by nearly every member of the Senate Finance Committee and Senate Majority Leader Harry Reid (D-NV). For that reason, and due to its low price tag, it stands a strong chance of Senate passage. The bill was introduced on 12 June and was referred to the Senate Finance Committee.
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