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House Passes Boyda Bill to End the Soldier Tax

150,000+ MILITARY FAMILIES WILL BENEFIT FROM THE HEART ACT

WASHINGTON, D.C. – “It’s about time," said Congresswoman Nancy Boyda (Kansas Second District), after the U.S. House of Representatives passed the Heroes Earnings Assistance and Relief Tax Act (HEART Act) yesterday on a unanimous, 410-0 vote.

The legislation incorporated the Tax Relief for Armed Combat Families Act of 2007, which Boyda authored and introduced into Congress earlier this year. Boyda's bill provides for a permanent end to the "Soldier Tax" – a restriction on the eligibility of military families to receive the Earned Income Tax Credit (EITC).

“In this week leading up to Veterans Day, it's fitting that Congress has acted to permanently end the Soldier Tax," Boyda said. "Our military continues to serve with honor and distinction. The last thing they need is to worry about whether they'll have to pay higher taxes next year.”

The EITC was first enacted by Congress in 1975 to provide tax relief and supplemental income to low- and moderate-income families. According to a 2005 Bell Policy Center study, based on analyses of data from the Department of Defense and the Government Accountability Office, at least 150,000 military families nationwide – approximately 11 percent of all active-duty members – earn base incomes that qualify for the EITC.

However, these soldiers’ base wages are often supplemented by combat pay or other allowances or incentives. These special pays are generally not subject to taxation but do count as income for determining eligibility for programs like the EITC. As a result, many military families have seen their EITC tax credit reduced or eliminated.

It is a tax penalty that applies only to military families – a "soldier tax."

In 2001, Congress expanded EITC eligibility by permitting military taxpayers to elect whether or not to include combat and other special pays in their earned income. The provision, which provided critical tax relief and support to military families, is set to expire on December 31, 2007.

Boyda said, "While I don’t understand the lack of previous, permanent action, I am proud to help say ‘thank you’ to our soldiers for their immense dedication. The HEART Act finally ends the Soldier Tax. It makes expanded EITC eligibility a permanent tax relief for our troops and their families.”

Rep. Boyda Addresses Soldier Tax on House Floor ( 09/03/08 01:33 PM PST )