Military Money and Finance

HEART ACT
Added Tax Breaks for the Military

Before recessing for the 2008 Memorial Day holiday, Congress passed some new tax relief for military families. And it's all heart for military active duty, veterans, military reservists and more.

"This bill is called the HEART Act, but I would prefer to call it the 'Thank You Bill' -- thank you to the tens of thousands of American men and women who have responded to America's call to fight this war and place themselves in harm's way to serve this nation," Charles Rangel (D-N.Y.) has said.

The Heroes Earnings Assistance and Relief Tax Act, or HEART Act (H.R. 6081), was unanimously approved by the House, and two days later, by the Senate, by voice vote.

It now awaits signature by the President of the United States.

The $2 billion cost of the bill's tax breaks would be paid for by preventing other people and companies avoiding taxes. Some of those companies, including defense contractors, have overseas offices specifically set up in order to to avoid paying U.S. Social Security and Medicare taxes.

SOME PROVISIONS OF THE HEART ACT

• The permanent ability to include combat pay as earned income for purposes of claiming the Earned Income Tax Credit.
• Active-duty reservists can make penalty-free withdrawals from their retirement plans.
• Those on active military duty who file a joint tax return will be eligible for the economic stimulus rebate even if the spouse does not have a Social Security number.
• Military survivors can place death benefits into tax-deferred retirement or savings plans.
• A tax credit for small business employers who make up the difference of wages lost to employees called to active military duty.

The HEART Act will also make thousands of veterans eligible for low-interest home loans. Stay posted to Military Hub for the latest on the HEART act and what it can mean for you.