Summary
The IRS announced that a one-time payment called the "Warrior Dividend" given to military service members in December 2025 is tax-free. This $1,776 payment aims to provide financial aid to about 1.5 million U.S. military members. The tax benefits are part of broader changes under a 2025 law, which includes new deductions for seniors and tax breaks for overtime and tips.
Key Facts
- The IRS declared the $1,776 "Warrior Dividend" for military service members is tax-free.
- The payment was given to 1.5 million active service members in December 2025.
- The funds for the payment came from a $2.9-billion allocation in the "One Big Beautiful Bill."
- The payment applies to service members in pay grades O-6 and below, plus eligible Reserve members.
- New tax laws also include a $6,000 deduction for those aged 65 and older, valid until 2028.
- Additional tax breaks are available for tips and overtime pay.
- The standard deduction amounts have increased under the new law.
- The IRS will start accepting 2025 tax returns on January 26, 2026.
