India, Feb. 6 -- The Internal Revenue Service has confirmed that a one-time $1,776 payment issued to nearly 1.5 million Americans in December 2025 is fully tax-free. Recipients do not need to report the payment on their federal tax returns, and the amount will not affect tax liability, credits, or benefit calculations, according to Marca.

The clarification issued by the IRS in January, follows questions from service members who saw the payment listed on their earnings statements and were unsure whether it would be treated as regular income.

IRS and Treasury officials have now made clear that no action is required from recipients during tax filing.

The payment qualifies as a military benefit, similar to allowances that are excluded from...