Should all retention bonuses be tax-free?

SGM Matthew Quick — Tue, 25 Jul 2017 22:55:02 -0400

Currently, retention bonuses are taxed at 25% (3% less than regular taxed income).

Response by SrA Private RallyPoint Member made Jul 25 at 2017 11:01 PM

SrA Private RallyPoint Member — Tue, 25 Jul 2017 23:01:10 -0400

If you want people to stay in, people like me and other lower enlisted who are still in their first contract trying to decide whether or not to make it a career or bail, then dont tax the bonus they GET for staying in. Its supposed to be an incentive.

Response by 1SG Private RallyPoint Member made Jul 25 at 2017 11:38 PM

1SG Private RallyPoint Member — Tue, 25 Jul 2017 23:38:15 -0400

I don't have an appropriate answer option. I think it should always be taxed.

Response by LTC Private RallyPoint Member made Jul 25 at 2017 11:47 PM

LTC Private RallyPoint Member — Tue, 25 Jul 2017 23:47:53 -0400

This has always been an issue. Let's change it. SGM, post another comment for all RP members to contact AUSA and have them speak for the Veterans and Active Duty Service Members on this topic to members of Congress.
Just an idea.

Response by LTJG Richard Bruce made Jul 25 at 2017 11:52 PM

LTJG Richard Bruce — Tue, 25 Jul 2017 23:52:26 -0400

Bonus should be taxed at the same rate as normal salary. Taxed too high, the value of the bonus is weakened. Taxed too low, it becomes a tax dodge.

Response by PVT Mark Brown made Jul 25 at 2017 11:53 PM

PVT Mark Brown — Tue, 25 Jul 2017 23:53:55 -0400

All military pay should be tax-free. DOD should make appropriate SS contributions for a military folks. I was spoiled in Korea, no tax for 27 months but my SS life long earnings history show the money I earned while in the Army during those years, I guess to calculate into SS benefits.

Response by PVT Mark Brown made Jul 25 at 2017 11:56 PM

PVT Mark Brown — Tue, 25 Jul 2017 23:56:39 -0400

So if you get a renlistment bonus of $40,000 you have to give back $10,000. Now, tell me, just how much sense does that make. "Here, Soldier, I will give you $40,000 if you re-up. OK Thank you. Oh, Did I say $40,000? Oops, I meant to say $30,000. That's OK though, just "suck it up sucker."

Response by SFC Curtis Halford (Ret) made Jul 26 at 2017 1:36 AM

SFC Curtis Halford (Ret) — Wed, 26 Jul 2017 01:36:17 -0400

One small, but important correction SGM. The current tax rate for bonuses is not 3% less than regular income for most Soldiers. Even with a 40K bonus, a Soldier would have to be an E-7 over 16 years of service or an E-8 over 12 yrs TIS to be taxed at 28% on their basic pay. To say that it is 3% less than regular income suggests that it already receives at least some kind of discount when it does not, based on current federal tax brackets.

Response by LTJG Edward Bangor Jr made Jul 26 at 2017 2:33 AM

LTJG Edward Bangor Jr — Wed, 26 Jul 2017 02:33:57 -0400

I think that enlistment/reenlistment bonuses should be tax free, but should have their values adjusted to reflect what Congress was willing to give you in the first place. If it's $30k you take home, than it should be a $30k bonus that isn't taxed. There's a psychological element to this. You are agreeing to put your life on the line or keep it there, and the system isn't being up front with you. I find it to be bogus.

Then again, I also think the whole part of taking income tax out of our paychecks to be odd to start with. Federal income tax pays my salary, but I also pay said tax. It seems like circular logic to me.

Response by SPC Private RallyPoint Member made Jul 26 at 2017 2:43 AM

SPC Private RallyPoint Member — Wed, 26 Jul 2017 02:43:16 -0400

So we're paid from taxes that get taxed, and our bonus is taxed from the taxes that are paid to us that we pay taxes on?

No I don't think it should be and I don't think anyone should get screwed over around April 15th for the addition to their income. Hey Troop, here's $10,000 for re-enlisting so we can maintain your level of experience and the troop levels we need. Oh by the way you only get half, after taxes, so it's $3,500. The other half, after taxes we'll give to you in installments.

Bonuses are kind of a joke in my opinion, not really the reason anyone should have to re-enlist since they're kinda BS.

Response by SSG Private RallyPoint Member made Jul 26 at 2017 3:20 AM

SSG Private RallyPoint Member — Wed, 26 Jul 2017 03:20:29 -0400

Most of them get it back at tax time anyway

Response by SSG Private RallyPoint Member made Jul 26 at 2017 9:13 AM

SSG Private RallyPoint Member — Wed, 26 Jul 2017 09:13:57 -0400

The last time I reenlisted was in 2015. 6 years for $12k. That was split. $6k up front and $6k after 4 years. Taxes turned that $6k into $4.8k. A year later I started as a Technician with the Guard. A month or so later I was contacted and told that by becoming a Tech, I forfeit that second half of the bonus.

Response by SrA James Cannon made Jul 26 at 2017 11:23 AM

SrA James Cannon — Wed, 26 Jul 2017 11:23:05 -0400

Absolutely. All reenlistment and retention bonuses should be tax free.

Response by SSG Randall P. made Jul 26 at 2017 3:13 PM

SSG Randall P. — Wed, 26 Jul 2017 15:13:52 -0400

I would prefer tax free... Because who doesn't want more money!

If it says 20k for 36 AOS... Give it to em 20k.

Response by Cadet PVT Private RallyPoint Member made Jul 26 at 2017 3:40 PM

Cadet PVT Private RallyPoint Member — Wed, 26 Jul 2017 15:40:50 -0400

Honestly military pay shouldn't even be taxed in my opinion. Its basically the government getting a partial refund of what they pay you.

Response by SFC Stephen King made Jul 26 at 2017 4:00 PM

SFC Stephen King — Wed, 26 Jul 2017 16:00:35 -0400

yes,

Response by LTC Jason Mackay made Jul 30 at 2017 9:36 PM

LTC Jason Mackay — Sun, 30 Jul 2017 21:36:21 -0400

Yes. Full stop.

Response by CPO Mark Robinson made Aug 8 at 2017 7:56 PM

CPO Mark Robinson — Tue, 08 Aug 2017 19:56:44 -0400

It does make a difference. I seen several people who were adamant about getting out change their minds when we entered the official war zone and the Reenlistment bonus suddenly became tax free.

Response by SFC Jim Ruether made Aug 16 at 2017 6:12 PM

SFC Jim Ruether — Wed, 16 Aug 2017 18:12:42 -0400

Absolutely What good does it do when you are given a nice fat retention bonus and a fourth of it goes to Uncle for some weapon system that cost to much? That money was yours to spend or save and he takes it from you! Totally unfair!