26 U.S.C. § 134 — Certain military benefits

Page 611 TITLE 26—INTERNAL REVENUE CODE § 134 effect on the day before the date of the enactment of this Act) [set out above] made on or before such date or to refinance loans described in this paragraph if— ‘‘(A) the refinancing loans meet the requirements of section 133 of such Code (as so in effect), ‘‘(B) immediately after the refinancing the prin- cipal amount of the loan resulting from the refi- nancing does not exceed the principal amount of the refinanced loan (immediately before the refinancing), and ‘‘(C) the term of such refinancing loan does not ex- tend beyond the last day of the term of the original securities acquisition loan. For purposes of this paragraph, the term ‘securities ac- quisition loan’ includes a loan from a corporation to an employee stock ownership plan described in section 133(b)(3) of such Code (as so in effect). ‘‘(3) EXCEPTION.—Any loan made pursuant to a bind- ing written contract in effect before June 10, 1996, and at all times thereafter before such loan is made, shall be treated for purposes of paragraphs (1) and (2) as a loan made on or before the date of the enactment of this Act.’’ § 134. Certain military benefits (a) General rule Gross income shall not include any qualified military benefit. (b) Qualified military benefit For purposes of this section— (1) In general The term ‘‘qualified military benefit’’ means any allowance or in-kind benefit (other than personal use of a vehicle) which— (A) is received by any member or former member of the uniformed services of the United States or any dependent of such member by reason of such member’s status or service as a member of such uniformed services, and (B) was excludable from gross income on September 9, 1986, under any provision of law, regulation, or administrative practice which was in effect on such date (other than a provision of this title). (2) No other benefit to be excludable except as provided by this title Notwithstanding any other provision of law, no benefit shall be treated as a qualified mili- tary benefit unless such benefit— (A) is a benefit described in paragraph (1), or (B) is excludable from gross income under this title without regard to any provision of law which is not contained in this title and which is not contained in a revenue Act. (3) Limitations on modifications (A) In general Except as provided in subparagraphs (B) and (C) and paragraphs (4) and (5), no modi- fication or adjustment of any qualified mili- tary benefit after September 9, 1986, shall be taken into account. (B) Exception for certain adjustments to cash benefits Subparagraph (A) shall not apply to any adjustment to any qualified military benefit payable in cash which— (i) is pursuant to a provision of law or regulation (as in effect on September 9, 1986), and (ii) is determined by reference to any fluctuation in cost, price, currency, or other similar index. (C) Exception for death gratuity adjustments made by law Subparagraph (A) shall not apply to any adjustment to the amount of death gratuity payable under chapter 75 of title 10, United States Code, which is pursuant to a provi- sion of law enacted after September 9, 1986. (4) Clarification of certain benefits For purposes of paragraph (1), such term in- cludes any dependent care assistance program (as in effect on the date of the enactment of this paragraph) for any individual described in paragraph (1)(A). (5) Travel benefits under operation hero miles The term ‘‘qualified military benefit’’ in- cludes a travel benefit provided under section 2613 of title 10, United States Code (as in effect on the date of the enactment of this para- graph). (6) Certain State payments The term ‘‘qualified military benefit’’ in- cludes any bonus payment by a State or polit- ical subdivision thereof to any member or former member of the uniformed services of the United States or any dependent of such member only by reason of such member’s serv- ice in a combat zone (as defined in section 112(c)(2), determined without regard to the parenthetical). (Added Pub. L. 99–514, title XI, § 1168(a), Oct. 22, 1986, 100 Stat. 2512; amended Pub. L. 100–647, title I, § 1011B(f)(1), (2)(A), (3), Nov. 10, 1988, 102 Stat. 3489, 3490; Pub. L. 108–121, title I, §§ 102(b)(1), (2), 106(a), (b)(1), Nov. 11, 2003, 117 Stat. 1337–1339; Pub. L. 108–375, div. A, title V, § 585(b)(1), (2)(A), Oct. 28, 2004, 118 Stat. 1931, 1932; Pub. L. 110–245, title I, § 112(a), June 17, 2008, 122 Stat. 1635; Pub. L. 115–141, div. U, title IV, § 401(a)(39), Mar. 23, 2018, 132 Stat. 1186.) Editorial Notes REFERENCES IN TEXT The date of the enactment of this paragraph, referred to in subsec. (b)(4), is the date of enactment of Pub. L. 108–121, which was approved Nov. 11, 2003. The date of the enactment of this paragraph, referred to in subsec. (b)(5), is the date of enactment of Pub. L. 108–375, which was approved Oct. 28, 2004. PRIOR PROVISIONS A prior section 134 was renumbered section 140 of this title. AMENDMENTS 2018—Subsec. (b)(6). Pub. L. 115–141 substituted ‘‘a combat’’ for ‘‘an combat’’. 2008—Subsec. (b)(6). Pub. L. 110–245 added par. (6). 2004—Subsec. (b)(3)(A). Pub. L. 108–375, § 585(b)(2)(A), substituted ‘‘paragraphs (4) and (5)’’ for ‘‘paragraph (4)’’. Subsec. (b)(5). Pub. L. 108–375, § 585(b)(1), added par. (5). 2003—Subsec. (b)(3)(A). Pub. L. 108–121, § 106(b)(1), in- serted ‘‘and paragraph (4)’’ after ‘‘subparagraphs (B) and (C)’’. Pub. L. 108–121, § 102(b)(2), substituted ‘‘subparagraphs (B) and (C)’’ for ‘‘subparagraph (B)’’. Page 612 TITLE 26—INTERNAL REVENUE CODE § 135 Subsec. (b)(3)(C). Pub. L. 108–121, § 102(b)(1), added sub- par. (C). Subsec. (b)(4). Pub. L. 108–121, § 106(a), added par. (4). 1988—Subsec. (b)(1). Pub. L. 100–647, § 1011B(f)(2)(A), inserted ‘‘(other than personal use of a vehicle)’’ after ‘‘in-kind benefit’’ in introductory text. Subsec. (b)(1)(B). Pub. L. 100–647, § 1011B(f)(1), sub- stituted ‘‘, regulation, or administrative practice’’ for ‘‘or regulation thereunder’’. Subsec. (b)(3)(A). Pub. L. 100–647, § 1011B(f)(3), struck out ‘‘under any provision of law or regulation described in paragraph (1)’’ after ‘‘September 9, 1986,’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–245, title I, § 112(b), June 17, 2008, 122 Stat. 1635, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to payments made before, on, or after the date of the enactment of this Act [June 17, 2008].’’ EFFECTIVE DATE OF 2004 AMENDMENT Pub. L. 108–375, div. A, title V, § 585(b)(3), Oct. 28, 2004, 118 Stat. 1932, provided that: ‘‘The amendments made by this subsection [amending this section and sections 3121, 3306, and 3401 of this title] shall apply to travel benefits provided after the date of the enactment of this Act [Oct. 28, 2004].’’ EFFECTIVE DATE OF 2003 AMENDMENT Pub. L. 108–121, title I, § 102(b)(3), Nov. 11, 2003, 117 Stat. 1337, provided that: ‘‘The amendments made by this subsection [amending this section] shall apply with respect to deaths occurring after September 10, 2001.’’ Pub. L. 108–121, title I, § 106(c), Nov. 11, 2003, 117 Stat. 1339, provided that: ‘‘The amendments made by this section [amending this section and sections 3121, 3306, and 3401 of this title] shall apply to taxable years be- ginning after December 31, 2002.’’ EFFECTIVE DATE OF 1988 AMENDMENT Pub. L. 100–647, title I, § 1011B(f)(2)(B), Nov. 10, 1988, 102 Stat. 3490, provided that: ‘‘The amendment made by subparagraph (A) [amending this section] shall apply to taxable years beginning after December 31, 1986.’’ Amendment by section 1011B(f)(1), (3) of Pub. L. 100–647 effective, except as otherwise provided, as if in- cluded in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE Pub. L. 99–514, title XI, § 1168(c), Oct. 22, 1986, 100 Stat. 2513, as amended by Pub. L. 100–647, title I, § 1011B(f)(4), Nov. 10, 1988, 102 Stat. 3490, provided that: ‘‘The amend- ments made by this section [enacting this section] shall apply to taxable years beginning after December 31, 1984.’’ NO INFERENCE TO BE DRAWN FROM AMENDMENT BY PUB. L. 108–121 Pub. L. 108–121, title I, § 106(d), Nov. 11, 2003, 117 Stat. 1339, provided that: ‘‘No inference may be drawn from the amendments made by this section [amending this section and sections 3121, 3306, and 3401 of this title] with respect to the tax treatment of any amounts under the program described in section 134(b)(4) of the Internal Revenue Code of 1986 (as added by this section) for any taxable year beginning before January 1, 2003.’’ § 135. Income from United States savings bonds used to pay higher education tuition and fees (a) General rule In the case of an individual who pays qualified higher education expenses during the taxable year, no amount shall be includible in gross in- come by reason of the redemption during such year of any qualified United States savings bond. (b) Limitations (1) Limitation where redemption proceeds ex- ceed higher education expenses (A) In general If— (i) the aggregate proceeds of qualified United States savings bonds redeemed by the taxpayer during the taxable year ex- ceed (ii) the qualified higher education ex- penses paid by the taxpayer during such taxable year, the amount excludable from gross income under subsection (a) shall not exceed the ap- plicable fraction of the amount excludable from gross income under subsection (a) with- out regard to this subsection. (B) Applicable fraction For purposes of subparagraph (A), the term ‘‘applicable fraction’’ means the fraction the numerator of which is the amount described in subparagraph (A)(ii) and the denominator of which is the amount described in subpara- graph (A)(i). (2) Limitation based on modified adjusted gross income (A) In general If the modified adjusted gross income of the taxpayer for the taxable year exceeds $40,000 ($60,000 in the case of a joint return), the amount which would (but for this para- graph) be excludable from gross income under subsection (a) shall be reduced (but not below zero) by the amount which bears the same ratio to the amount which would be so excludable as such excess bears to $15,000 ($30,000 in the case of a joint return). (B) Inflation adjustment In the case of any taxable year beginning in a calendar year after 1990, the $40,000 and $60,000 amounts contained in subparagraph (A) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘‘calendar year 1989’’ for ‘‘calendar year 2016’’ in subparagraph (A)(ii) thereof. (C) Rounding If any amount as adjusted under subpara- graph (B) is not a multiple of $50, such amount shall be rounded to the nearest mul- tiple of $50 (or if such amount is a multiple of $25, such amount shall be rounded to the next highest multiple of $50). (c) Definitions For purposes of this section— (1) Qualified United States savings bond The term ‘‘qualified United States savings bond’’ means any United States savings bond issued—