II 

118TH CONGRESS 

1ST SESSION S. 3243 

To amend the Internal Revenue Code of 1986 to exclude all military 

retirement and related benefits from Federal income tax. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 7, 2023 

Mr. RICKETTS introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to exclude 

all military retirement and related benefits from Federal 

income tax. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Tax Cuts for Veterans 

5 Act of 2023’’. 

6 SEC. 2. EXCLUSION OF ALL MILITARY RETIREMENT AND 

7 RELATED BENEFITS. 

8 (a) IN GENERAL.—Section 122 of the Internal Rev9 enue Code of 1986 is amended to read as follows: 


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2 

•S 3243 IS

1 ‘‘SEC. 122. CERTAIN UNIFORMED SERVICES RETIREMENT 

2 PAY AND RELATED BENEFITS. 

3 ‘‘(a) GENERAL RULE.—In the case of a member or 

4 former member of the armed forces of the United States, 

5 gross income does not include— 

6 ‘‘(1) any retired or retainer pay paid under title 

7 10 or 14, United States Code, or 

8 ‘‘(2) any amounts not described in section 

9 104(a)(4) received as monthly compensation, pen10 sion, pay, annuity, or allowance paid under title 10, 

11 14, 37, or 38, United States Code, in connection 

12 with a disability or combat-related injury or dis13 ability or death of a member of the armed forces. 

14 ‘‘(b) CERTAIN REDUCED UNIFORMED SERVICES RE15 TIREMENT PAY.— 

16 ‘‘(1) IN GENERAL.—In the case of a member or 

17 former member of the uniformed services of the 

18 United States other than a member or former mem19 ber of the armed forces, gross income does not in20 clude the amount of any reduction in retired or re21 tainer pay pursuant to the provisions of chapter 73 

22 of title 10, United States Code. 

23 ‘‘(2) SPECIAL RULE.— 

24 ‘‘(A) AMOUNT EXCLUDED FROM GROSS IN25 COME.—In the case of any individual referred 

26 to in paragraph (1), all amounts received as reVerDate Sep 11 2014 02:40 Nov 09, 2023 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3243.IS S3243

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•S 3243 IS

1 tired or retainer pay shall be excluded from 

2 gross income until there has been so excluded 

3 an amount equal to the consideration for the 

4 contract. The preceding sentence shall apply 

5 only to the extent that the amounts received 

6 would, but for such sentence, be includible in 

7 gross income. 

8 ‘‘(B) CONSIDERATION FOR THE CON9 TRACT.—For purposes of subparagraph (A) and 

10 section 72(n), the term ‘consideration for the 

11 contract’ means, in respect of any individual, 

12 the sum of— 

13 ‘‘(i) the total amount of the reduc14 tions before January 1, 1966, in the indi15 vidual’s retired or retainer pay by reason 

16 of an election under chapter 73 of title 10 

17 of the United States Code, and 

18 ‘‘(ii) any amounts deposited at any 

19 time by the individual pursuant to section 

20 1438 or 1452(d) of such title 10. 

21 ‘‘(c) DEFINITIONS.—For purposes of this section, the 

22 terms ‘armed forces’ and ‘uniformed services’ have the re23 spective meanings given such terms by section 101 of title 

24 10, United States Code.’’. 

25 (b) CONFORMING AMENDMENTS.— 


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•S 3243 IS

1 (1) CONFORMING REPEAL.— 

2 (A) IN GENERAL.—Section 1403 of title 

3 10, United States Code, is repealed. 

4 (B) CLERICAL AMENDMENT.—The table of 

5 sections at the beginning of chapter 71 of such 

6 title is amended by striking the item relating to 

7 section 1403. 

8 (2) ANNUITIES.—Subsection (n) of section 72 

9 of the Internal Revenue Code of 1986 is amended by 

10 striking ‘‘Subsection (b)’’ and inserting ‘‘In the case 

11 of any member or former member of the uniformed 

12 services of the United States other than a member 

13 or former member of the armed forces, subsection 

14 (b)’’. 

15 (c) CLERICAL AMENDMENT.—The item relating to 

16 section 122 in the table of sections for part III of sub17 chapter B of chapter 1 of the Internal Revenue Code of 

18 1986 is amended to read as follows: 

‘‘Sec. 122. Certain uniformed services retirement pay and related benefits.’’. 

19 (d) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to taxable years beginning after 

21 the date of the enactment of this Act. 

Æ 


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