Representative Claudia Tenney (R-NY-24) issued a press release on March 12, 2025 announcing that she introduced the “No Tax on LOSAP Act”, with the described intention to raise the amount of federal nontaxable LOSAP income from $600 to $12,000 per year. You can read the press release here: https://tenney.house.gov/media/press-releases/congresswoman-tenney-leads-no-tax-losap-act-reward-and-recruit-volunteer
This immediately caught our attention, but not for the reason you might first think! The press release mentions that the current federal non-taxable amount of LOSAP is $600. However, that was not our understanding based on current guidance.
We addressed this in a March 2022 blog post, which you can read here: https://www.fireflyadmin.com/blog/index.php/2022/03/31/losap-payments-in-new-york-do-not-qualify-for-federal-tax-exemption-under-vripa/
Essentially, the NVFC sought clarification from the IRS regarding if LOSAP payments would qualify for the $600 federal income tax exemption provided under VRIPA (Volunteer Responder Incentive Protection Act), and the IRS response was basically, no.
That meant we were extremely curious to read more about this new legislation, first to see if it may be interpreted differently that current LOSAP payments could be federal income tax free, up to $600.
Rep. Tenney’s bill was formally introduced on March 21, but the text is not yet available as of the date of this post. However, we have a bill number and a summary:
H.R.2279 – To amend the Internal Revenue Code of 1986 to increase the amount excluded from gross income for qualified payments to individuals providing volunteer firefighting or emergency medical services, and to clarify that payments under length of service award programs are qualified payments.
This satisfies our initial curiosity – mainly that this bill would also seek to clarify that LOSAP payments would be qualified payments for, presumably, the VRIPA exemption. This would seem to imply that the press release was slightly off, and that the initial guidance from the IRS stands – that LOSAP payments do not qualify for up to $600 in federal tax exemption under VRIPA.
The bill would also seem to increase the VRIPA exemption from $600 to $12,000. Since VRIPA allows volunteer firefighters to exempt other income/benefits received for their volunteer firefighter service, this bill would have additional benefits to volunteers who either are not at the age to collect their LOSAP benefit or did not volunteer at a department with a LOSAP.
Another possible ramification of this bill could be that the IRS might be forced to specifically state the form on which LOSAP payments should be reported at the end of the year. Ideally, the IRS would clarify that payments can be reported on a 1099-R with a certain code, which would clear up a lot of confusion. As it stands, the 1099-R is not the best form given that a LOSAP is not a pension or an annuity.
We will continue to follow and update you on the progress of H.R.2279, including when the actual text of the bill is made available.