The BNA Fairness Act amends the Internal Revenue Code to exclude the basic needs allowance for members of the Armed Forces from gross income, making it a qualified military benefit. This change applies to taxable years ending after the enactment date of this Act.
Steve Womack
Representative
AR-3
The BNA Fairness Act amends the Internal Revenue Code of 1986 to exclude the basic needs allowance for members of the Armed Forces from gross income. This allowance, as defined under section 402b of title 37, United States Code, is now classified as a qualified military benefit, providing a tax advantage to service members. This provision is applicable for taxable years ending after the enactment of this act.
BNA Fairness Act: New Tax Break for Military Families Receiving Basic Needs Allowance
The BNA Fairness Act is a new law that changes how the Basic Needs Allowance (BNA) is treated for tax purposes. Essentially, it stops the IRS from taxing this specific allowance, which is designed to help military families cover basic living expenses.
Tax-Free Allowance
The core of the BNA Fairness Act is a change to the tax code, specifically section 134(b) of the Internal Revenue Code of 1986. The bill adds the Basic Needs Allowance (found under section 402b of title 37, United States Code) to the list of "qualified military benefits" that are excluded from gross income. This means that if you're a service member receiving BNA, that money won't be counted as part of your taxable income anymore.
- Real-World Example: Imagine a young enlisted family just starting out, receiving the BNA to help make ends meet. Previously, that allowance would have been taxed like regular income. Now, it's entirely tax-free, meaning a bit more money stays in their pockets each month. This could be the difference between making rent comfortably or struggling to pay bills.
Who's Affected?
This change directly benefits military families who are receiving the Basic Needs Allowance. It applies to any taxable year ending after the bill is enacted. So, if the bill becomes law in 2024, it would apply to the 2024 tax year and onwards.
Potential Challenges
While the bill is straightforward, one potential area to watch is how the BNA is structured. If the allowance scales significantly with rank, the tax break could disproportionately benefit higher-ranking service members, who might already be in a better financial position. There is no cap mentioned in the bill to address this (SEC. 2).
The Big Picture
This law sits alongside existing tax rules for military personnel. It's a targeted change designed to provide a little extra financial breathing room for families who are already making sacrifices for the country. It's a direct financial benefit, and could even help with military retention by making service a bit more financially attractive.