As a result of the extended military deployments in Iraq and Afghanistan, many military families are enduring economic hardships.   To date, Congress has enacted a mix of temporary tax and social security provisions to alleviate some of the difficulties.  While many of the provisions have provided some relief, additional legislation is needed to make permanent the temporary provisions which offer economic relief to military families.

HR3933 will make permanent the ability to include combat pay as earned income for purposes of the Earned Income Tax Credit (EITC); make permanent the Internal Revenue Code provision that permits active duty reservists to make penalty-free withdrawals from retirement plans; and disregard state annuity payments paid to blind veterans when determining SSI eligibility benefits.

“This legislation amends the IRS code to provide a permanent measure of economic relief to the courageous women and men in our military, “said Rep. Yvette D. Clarke.  “Extended deployments have taken a toll on our troops in more ways than one.  The goal of amending the IRS codes is to provide these working families with some much needed relief.”

EITC is a refundable tax credit for eligible low-income workers.  Subject to certain limitations, military compensation earned in the combat zone is excluded from income.  Current law allows a taxpayer to elect to include combat pay in the definition of the earned income for purposes of calculating the EITC.  This provision expires on January 2, 2008.  HR 3933 would make the election permanent.

Additionally, HR3933 would amend the Pension Protection Act of 2006 from a temporary to a permanent status.  The Pension Protection Act of 2006 was created as a temporary exception from the 10% early withdrawal additional tax for military reservists and members of the National Guard called to active duty. 

Finally, HR3933 allows for the omission of annuity payments to blind veterans when determining SSI eligibility and benefit amounts.

Congresswoman Clarke represents New York’s 11^th Congressional District located in central Brooklyn.

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