President Signs Military Tax Relief Act

On November 11, 2003, Veterans’ Day, the President signed the Military Family Tax Relief Act of 2003.

The new law provides a variety of tax breaks for U.S. military personnel, including :

  • a liberalization of the ownership and use time period for an exclusion of gain from the sales of a principal residence by members of the uniformed services or the U.S. Foreign Service, effective for sales after May 6, 1997;
  • an expansion of the exclusion of death gratuity payments (which would double to $12,000) from gross income with respect to deceased members of the military, effective for deaths after September 10, 2001; and
  • an above-the-line income tax deduction for the overnight travel expenses of National Guard and Reserve members, effective for tax years starting after December 31, 2002.

In addition, in response to the Space Shuttle Columbia disaster, it extends the Victims of Terrorism Tax Relief Act of 2001 (P.L. 107-134) to the families of astronauts who die while on a mission.

The $1.2 billion ten-year cost of the tax breaks was fully offset by extensions of customs user fees.

AUTHOR

Wolters Kluwer Tax and Accounting

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