There is no dedicated federal tax credit for first responders. Police officers, firefighters, paramedics, and EMTs don’t get a line on Form 1040 that reduces their taxes just for doing the job. What federal law does offer is a set of income exclusions that can be worth more than most credits: tax-free disability and survivor payments, a $3,000 annual health insurance exclusion for retirees, and a smaller exclusion for volunteer responders. The tangible dollar credits usually live at the state and local level.
Tax-Free Disability and Survivor Payments
The largest federal benefit for first responders is a complete exclusion from gross income for certain injury-related payments. The money never appears as taxable income.
Line-of-Duty Disability
Disability payments received because of a line-of-duty injury are generally excluded from gross income. Workers’ compensation benefits paid under any workers’ compensation statute are fully excludable.1Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness So are disability pensions tied to a service-connected injury for members of the armed forces, the Public Health Service, or similar government services.2Internal Revenue Service. Publication 575 – Pension and Annuity Income
One distinction trips up a lot of retired responders. If your disability retirement pay is calculated based on your age or years of service rather than the severity of the injury, the IRS treats it as a regular pension, not a disability benefit, and it becomes partially or fully taxable. Once you reach your plan’s minimum retirement age, even a legitimate disability pension converts to ordinary pension income for tax purposes.2Internal Revenue Service. Publication 575 – Pension and Annuity Income Getting this classification wrong means either overpaying tax or underreporting it.
Survivor Benefits Under the PSOB Program
When a public safety officer is killed in the line of duty, the federal Public Safety Officers’ Benefits program pays a tax-free lump sum to eligible survivors. For deaths occurring between October 1, 2025, and September 30, 2026, that payment is $461,656.3Bureau of Justice Assistance. Benefits by Year – PSOB The entire amount is excluded from gross income under Section 104(a)(6), and the paying agency should not issue a Form 1099 for it.4Internal Revenue Service. Compensation Paid to Dependents of Fallen Public Safety Officers Is Excluded From Gross Income
The exclusion also covers state program benefits paid to surviving dependents of a public safety officer who died as a direct result of a line-of-duty injury.1Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness If you receive a 1099 for a payment that should be excluded, contact the paying agency to have it corrected before you file.
The $3,000 Retiree Health Insurance Exclusion
Retired public safety officers can exclude up to $3,000 per year from taxable retirement plan distributions if the money pays for health insurance or long-term care insurance premiums.5Internal Revenue Service. Publication 575 – Pension and Annuity Income The exclusion applies to distributions from an eligible governmental retirement plan. The $3,000 cap is fixed by statute.
This benefit is frequently unclaimed because of an old rule. Before 2023, the retirement plan had to send the premium payment directly to the insurer. The SECURE 2.0 Act removed that requirement for distributions made after December 29, 2022. The plan can now distribute the funds to you and you can pay the insurer yourself while still claiming the exclusion. If a pension administrator told you years ago that your plan couldn’t support the deduction, it is worth asking again.
The Volunteer Firefighter and EMS Exclusion
Volunteers have their own federal exclusion under Section 139B of the Internal Revenue Code. Two types of benefits qualify:6Office of the Law Revision Counsel. 26 USC 139B – Benefits Provided to Volunteer Firefighters and Emergency Medical Responders
- Any reduction or rebate of state or local income, sales, or excise taxes provided because of your volunteer service. There is no dollar cap on this piece.
- Stipends, reimbursements, or other qualified payments from a state or local government for your service, capped at $50 for each month you perform services, or $600 for a full year.
To qualify, you must be a member of a volunteer organization that provides firefighting or emergency medical services and that has a written agreement with the state or local government to furnish those services.6Office of the Law Revision Counsel. 26 USC 139B – Benefits Provided to Volunteer Firefighters and Emergency Medical Responders The annual ceiling is modest, but it keeps small stipends from creating unexpected tax liability.
Who Counts as a Public Safety Officer
Eligibility for the disability exclusion, survivor benefit, and retiree health premium exclusion depends on meeting the federal definition of a public safety officer. That term covers anyone serving a public agency in an official capacity as a law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew. It also includes certain FEMA employees performing hazardous duties related to a declared disaster and state or local emergency management workers cooperating with FEMA under similar conditions.7GovInfo. U.S.C. Title 42 – The Public Health and Welfare The definition covers both paid and unpaid responders. Qualifying under federal law does not automatically mean you qualify under every state program, which may use a narrower or broader definition.
Unreimbursed Job Expenses: What You Cannot Deduct
A common misconception is that first responders can still write off boots, body armor, duty belts, required training, and uniform cleaning. Before 2018, those unreimbursed costs were deductible as miscellaneous itemized deductions on Schedule A when they exceeded 2% of adjusted gross income. The Tax Cuts and Jobs Act suspended that deduction, and the One Big Beautiful Bill Act signed in 2025 made the elimination permanent.8Internal Revenue Service. Instructions for Form 2106
W-2 first responders cannot deduct unreimbursed job expenses on their federal return. The only federal path to a tax benefit for these costs is an employer-provided accountable reimbursement plan, where the employer pays you back tax-free. If your department does not offer one, it is worth raising through the union or administration, because the employer can deduct the reimbursement as a business expense.
Some states still allow a deduction for unreimbursed employee expenses against state income tax even though the federal deduction is gone. If your state has an income tax, check whether it decoupled from the federal change. Keep receipts and mileage logs either way.
Where the Actual Credits Live: State and Local Programs
Because federal law offers no direct credit tied to first responder status, most tangible credits and rebates come from state and local governments. A few patterns repeat across the country.
Property Tax Exemptions
Many states offer property tax exemptions for first responders with service-connected disabilities, ranging from a partial reduction in assessed value to a complete exemption on a primary residence. Surviving spouses of officers killed in the line of duty often qualify for similar exemptions, though most states require that the surviving spouse has not remarried. Applications go through the county or municipal assessor’s office, and you generally need documentation from the former employer confirming the line-of-duty connection.
Volunteer Service Credits
A number of states and local jurisdictions provide income tax credits specifically for volunteer firefighters and EMS workers. These credits generally range from $200 to $1,500 and usually require a minimum number of service hours per year. Some jurisdictions offer property tax rebates instead of or in addition to income tax credits. These state benefits stack on top of the federal Section 139B exclusion, so a volunteer responder can benefit from both.
Pension Income Exclusions
Some states exclude part or all of public safety pension income from state income tax, even when that pension is fully taxable federally. Amounts vary and may depend on age, filing status, or years of service. If you are a retired first responder, your state’s revenue department can confirm whether any portion of your pension qualifies. In states with higher income tax rates, this can save thousands each year.