The Internal Revenue Service has clarified that the recently distributed $1,776 “warrior dividend” payment for troops is not subject to federal taxes. This announcement comes in the wake of President Donald Trump’s December 17 speech, where he revealed the payments aimed at supporting 1.5 million active-duty service members and certain Reserve Component members.
Details of the Warrior Dividend Payment
- Amount: $1,776
- Recipients: 1.5 million active-duty troops in pay grades O-6 and below, along with eligible Reserve Component members
- Funding Sources: Initially described as funded by tariff revenue and the One Big Beautiful Bill Act, subsequent reports clarified that tariffs were not the source.
The Pentagon classified this payment as a “supplemental basic allowance for housing.” The IRS has identified these payments as “qualified military benefits,” exempting them from gross income under federal tax law.
Tax Filing Process
The IRS will begin accepting tax returns on January 26, with the deadline for filing set for April 15, 2025. Active-duty service members stationed overseas may be eligible for extensions.
- Federal tax returns can be filed for free through MilTax.
- Eligible users can also file up to five state returns at no cost.
- Free tax preparation assistance is available through Military OneSource.
Federal W-2 tax statements will be accessible on the Department of Defense’s myPay site soon, though scheduled maintenance may temporarily disrupt access.
Support for Service Members
Additional assistance for tax preparation may be offered at various military installations through legal assistance offices, subject to space availability. This support aims to simplify the tax filing experience for service members and their families.
The announcement of the tax-free warrior dividend has been welcomed by military families, allowing them to utilize these funds without the burden of taxes. Pentagon press secretary Kingsley Wilson emphasized how this financial boost benefits warfighters and their families directly.
