H.R. 1735 would make several major changes to the military retirement system beginning in 2018. One such change, requiring the Department of Defense to make matching contributions to the Thrift Savings Plan (TSP) on behalf of military personnel, would encourage service members to increase their contributions to the TSP, thereby reducing their taxable income. CBO and the staff of the Joint Committee on Taxation estimate that enacting this bill would reduce revenues by about $1.3 billion over the 2018-2025 period (see attached table). Several other provisions would change direct spending by less than $500,000 over the 2016-2025 period. Because the bill would affect revenues and direct spending, pay-as-you-go procedures apply.
In the decade after 2025 and in subsequent decades, CBO expects that other changes to the military retirement system in the bill would reduce mandatory spending from the Military Retirement Trust Fund by more than the revenue losses from expanded participation in the TSP in those years.
