US Code

Public Law 119-73 (01/23/2026)

10 U.S.C. § 1175

Voluntary separation incentive

(a)
(1)
Consistent with this section and the availability of appropriations for this purpose, the Secretary of Defense and the Secretary of Homeland Security may provide a financial incentive to members of the armed forces described in subsection (b) for voluntary appointment, enlistment, or transfer to a reserve component, requested and approved under subsection (c).
(2)
(A)
Except as provided in subparagraph (B), a financial incentive provided a member under this section shall be paid for the period equal to twice the number of years of service of the member, computed as provided in subsection (e)(5).
(B)
If, before the expiration of the period otherwise applicable under subparagraph (A) to a member receiving a financial incentive under this section, the member is separated from a reserve component or is transferred to the Retired Reserve, the period for payment of a financial incentive to the member under this section shall terminate on the date of the separation or transfer unless—
(i)
the separation or transfer is required by reason of the age or number of years of service of the member;
(ii)
the separation or transfer is required by reason of the failure of selection for promotion or the medical disqualification of the member, except in a case in which the Secretary of Defense or the Secretary of Homeland Security determines that the basis for the separation or transfer is a result of a deliberate action taken by the member with the intent to avoid retention in the Ready Reserve or Standby Reserve; or
(iii)
in the case of a separation, the member is separated from the reserve component for appointment or enlistment in or transfer to another reserve component of an armed force for service in the Ready Reserve or Standby Reserve of that armed force.
(b)
The Secretary of Defense and the Secretary of Homeland Security may provide the incentive to a member of the armed forces if the member—
(1)
has served on active duty or full-time National Guard duty or any combination of active duty and full-time National Guard duty for more than 6 but less than 20 years;
(2)
has served at least 5 years of continuous active duty or full-time National Guard duty or any combination of active duty and full-time National Guard duty immediately preceding the date of separation;
(3)
meets such other requirements as the Secretary may prescribe from time to time, which may include requirements relating to—
(A)
years of service;
(B)
skill or rating;
(C)
grade or rank; and
(D)
remaining period of obligated service.
(c)
section 1174a of this title A member of the armed forces offered a voluntary separation incentive under this section shall be offered the opportunity to request separation under a program established pursuant to . If the Secretary concerned approves a request for separation under either such section, the member shall be separated under the authority of the section selected by such member.
(d)
(1)
A member of the armed forces described in subsection (b) may request voluntary appointment, enlistment, or transfer to a reserve component accompanied by this incentive, provided the member has completed 6 years of active service.
(2)
The Secretary, in his discretion, may approve or disapprove a request according to the needs of the armed forces.
(3)
After , the Secretary may not approve a request.
(e)
(1)
The annual payment of the incentive shall equal 2.5 percent of the monthly basic pay the member receives on the date appointed, enlisted, or transferred to the reserve component, multiplied by twelve and multiplied again by the member’s years of service.
(2)
A member entitled to voluntary separation incentive payments who is also entitled to basic pay for active or reserve service, or compensation for inactive duty training, may elect to have a reduction in the voluntary separation incentive payable for the same period in an amount not to exceed the amount of the basic pay or compensation received for that period.
(3)
(A)
A member who has received the voluntary separation incentive and who later qualifies for retired or retainer pay under this title shall have deducted from each payment of such retired or retainer pay an amount, in such schedule of monthly installments as the Secretary of Defense shall specify, taking into account the financial ability of the member to pay and avoiding the imposition of undue financial hardship on the member and member’s dependents, until the total amount deducted is equal to the total amount of voluntary separation incentive so paid. If the member elected to have a reduction in voluntary separation incentive for any period pursuant to paragraph (2), the deduction required under the preceding sentence shall be reduced as the Secretary of Defense shall specify.
(B)
If a member is receiving simultaneous voluntary separation incentive payments and retired or retainer pay, the member may elect to terminate the receipt of voluntary separation incentive payments. Any such election is permanent and irrevocable. The rate of monthly recoupment from retired or retainer pay of voluntary separation incentive payments received after such an election shall be reduced by a percentage that is equal to a fraction with a denominator equal to the number of months that the voluntary separation incentive payments were scheduled to be paid and a numerator equal to the number of months that would not be paid as a result of the member’s decision to terminate the voluntary separation incentive.
(4)
A member who is receiving voluntary separation incentive payments shall not be deprived of this incentive by reason of entitlement to disability compensation under the laws administered by the Department of Veterans Affairs, but there shall be deducted from voluntary separation incentive payments an amount equal to the amount of any such disability compensation concurrently received. Notwithstanding the preceding sentence, no deduction may be made from voluntary separation incentive payments for any disability compensation received because of an earlier period of active duty if the voluntary separation incentive is received because of discharge or release from a later period of active duty.
(5)
section 1405 of this title The years of service of a member for purposes of this section shall be computed in accordance with .
(f)
The member’s right to incentive payments shall not be transferable, except that the member may designate beneficiaries to receive the payments in the event of the member’s death.
(g)
Subject to subsection (h), payments under this provision shall be paid from appropriations available to the Department of Defense and the Department of Homeland Security for the Coast Guard.
(h)
(1)
There is established on the books of the Treasury a fund to be known as the “Voluntary Separation Incentive Fund” (hereinafter in this subsection referred to as the “Fund”). The Fund shall be administered by the Secretary of the Treasury. The Fund shall be used for the accumulation of funds in order to finance on an actuarially sound basis the liabilities of the Department of Defense under this section.
(2)
There shall be deposited in the Fund the following, which shall constitute the assets of the Fund:
(A)
Amounts paid into the Fund under paragraphs (5), (6), and (7).
(B)
Any amount appropriated to the Fund.
(C)
Any return on investment of the assets of the Fund.
(3)
All voluntary separation incentive payments made by the Secretary of Defense after , under this section shall be paid out of the Fund. To the extent provided in appropriation Acts, the assets of the Fund shall be available to the Secretary to pay voluntary separation incentives under this section.
(4)
The Department of Defense Board of Actuaries (hereinafter in this subsection referred to as the “Board”) shall perform the same functions regarding the Fund, as provided in this subsection, as such Board performs regarding the Department of Defense Military Retirement Fund.
(5)
Not later than , the Board shall determine the amount that is the present value, as of that date, of the future benefits payable under this section in the case of persons who are separated pursuant to this section before that date. The amount so determined is the original unfunded liability of the Fund. The Board shall determine an appropriate amortization period and schedule for liquidation of the original unfunded liability. The Secretary shall make deposits to the Fund in accordance with that amortization schedule.
(6)
For persons separated under this section on or after , the Secretary shall deposit in the Fund during the period beginning on that date and ending on —
(A)
such sums as are necessary to pay the current liabilities under this section during such period; and
(B)
the amount equal to the present value, as of , of the future benefits payable under this section, as determined by the Board.
(7)
(A)
For each fiscal year after fiscal year 1999, the Board shall—
(i)
carry out an actuarial valuation of the Fund and determine any unfunded liability of the Fund which deposits under paragraphs (5) and (6) do not liquidate, taking into consideration any cumulative actuarial gain or loss to the Fund;
(ii)
determine the period over which that unfunded liability should be liquidated; and
(iii)
determine for the following fiscal year, the total amount, and the monthly amount, of the Department of Defense contributions that must be made to the Fund during that fiscal year in order to fund the unfunded liabilities of the Fund over the applicable amortization periods.
(B)
The Board shall carry out its responsibilities for each fiscal year in sufficient time for the amounts referred to in subparagraph (A)(iii) to be included in budget requests for that fiscal year.
(C)
The Secretary of Defense shall pay into the Fund at the end of each month as the Department of Defense contribution to the Fund the amount necessary to liquidate unfunded liabilities of the Fund in accordance with the amortization schedules determined by the Board.
(8)
Amounts paid into the Fund under this subsection shall be paid from funds available for the pay of members of the armed forces under the jurisdiction of the Secretary of each military department.
(9)
section 1467 of this title The investment provisions of shall apply to the Voluntary Separation Incentive Fund.
(i)
The Secretary of Defense and the Secretary of Homeland Security may issue such regulations as may be necessary to carry out this section.
(j)
104 Stat. 155837 U.S.C. 4761
1 See References in Text note below.
section 1141 of this title A member of the armed forces who is provided a voluntary separation incentive under this section shall be eligible for the same benefits and services as are provided under chapter 58 of this title, sections 452 and 453(c) of title 37, and section 503(c) of the National Defense Authorization Act for Fiscal Year 1991 (;   note) for members of the armed forces who are involuntarily separated within the meaning of .

Pub. L. 102–190, div. A, title VI, § 662(a)(1)105 Stat. 1396Pub. L. 102–484, div. A, title X, § 1052(16)106 Stat. 2499Pub. L. 103–160, div. A, title V107 Stat. 1644Pub. L. 103–337, div. A, title V, § 542(c)108 Stat. 2769Pub. L. 105–261, div. A, title V112 Stat. 2025Pub. L. 106–398, § 1 [[div. A]114 Stat. 1654Pub. L. 107–296, title XVII, § 1704(b)(1)116 Stat. 2314Pub. L. 110–181, div. A, title IX, § 906(c)(1)122 Stat. 277Pub. L. 111–32, title III, § 318(b)123 Stat. 1874Pub. L. 112–81, div. A, title VI, § 631(f)(4)(A)125 Stat. 1465Pub. L. 112–239, div. A, title X, § 1076(a)(9)126 Stat. 1948Pub. L. 117–263, div. A, title VI, § 626(c)(3)136 Stat. 2628(Added , , ; amended , div. D, title XLIV, §§ 4405(b), 4406(a), (b), 4422(b), , , 2706, 2707, 2719; , §§ 502, 561(h), , , 1668; , , ; , §§ 561(b), 563(a), (b), , , 2028; , title V, §§ 571(b), 572(a)], , , 1654A–134, 1654A–135; , , ; , , ; , , ; , , ; , , ; , , .)

Editorial Notes

References in Text

section 503(c) of Pub. L. 101–510104 Stat. 1558section 476 of Title 37section 453 of Title 37Section 503(c) of the National Defense Authorization Act for Fiscal Year 1991, referred to in subsec. (j), is , div. A, title V, , , which was formerly set out as a note under , Pay and Allowances of the Uniformed Services, prior to transfer and is now set out as a note under .

Amendments

Pub. L. 117–2632022—Subsec. (j). substituted “sections 452 and 453(c)” for “sections 474 and 476”.

Pub. L. 112–239, § 1076(a)(9)Pub. L. 112–81, § 631(f)(4)(A)2013—Subsec. (j). , made technical amendment to directory language of . See 2011 Amendment note below.

Pub. L. 112–81, § 631(f)(4)(A)Pub. L. 112–239, § 1076(a)(9)2011—Subsec. (j). , as amended by , substituted “474” for “404” and substituted “476” for “406” in two places.

Pub. L. 111–322009—Subsec. (e)(3)(A). amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “A member who has received the voluntary separation incentive and who qualifies for retired or retainer pay under this title shall have deducted from each payment of such retired or retainer pay so much of such pay as is based on the service for which he received the voluntary separation incentive until the total amount deducted equals the total amount of voluntary separation incentive received. If the member elected to have a reduction in voluntary separation incentive for any period pursuant to paragraph (2), the deduction required under the preceding sentence shall be reduced accordingly.”

Pub. L. 110–1812008—Subsec. (h)(4). struck out “Retirement” before “Board of Actuaries”.

Pub. L. 107–2962002—Subsecs. (a)(1), (2)(B)(ii), (b), (g), (i). substituted “of Homeland Security” for “of Transportation”.

Pub. L. 106–398, § 1 [[div. A]2000—Subsec. (d)(3). , title V, § 571(b)], substituted “” for “”.

Pub. L. 106–398, § 1 [[div. A]Subsec. (e)(3). , title V, § 572(a)], designated existing provisions as subpar. (A) and added subpar. (B).

Pub. L. 105–261, § 563(a)1998—Subsec. (a). , designated existing provisions as par. (1), struck out “, for the period of time the member serves in a reserve component” after “under subsection (c)”, and added par. (2).

Pub. L. 105–261, § 561(b)Subsec. (d)(3). , substituted “” for “”.

Pub. L. 105–261, § 563(b)Subsec. (e)(1). , struck out at end “The annual payment will be made for a period equal to the number of years that is equal to twice the number of years of service of the member.”

Pub. L. 103–337, § 542(c)(1)1994—Subsecs. (a), (b). , inserted “and the Secretary of Transportation” after “Secretary of Defense”.

Pub. L. 103–337, § 542(c)(2)Subsec. (c). , struck out “of the military department” after “Secretary”.

Pub. L. 103–337, § 542(c)(3)Subsec. (g). , inserted “and the Department of Transportation for the Coast Guard” before period at end.

Pub. L. 103–337, § 542(c)(4)Subsec. (h)(3). , inserted “by the Secretary of Defense” after “incentive payments made” and “to the Secretary” after “shall be available”.

Pub. L. 103–337, § 542(c)(5)Subsec. (i). , inserted “and the Secretary of Transportation” after “Secretary of Defense”.

Pub. L. 103–160, § 5021993—Subsec. (d)(1). , struck out “before ” after “active service”.

Pub. L. 103–160, § 561(h)(1)Subsecs. (d)(3), (h)(6). , substituted “” for “” wherever appearing.

Pub. L. 103–160, § 561(h)(2)Subsec. (h)(7)(A). , substituted “fiscal year 1999” for “fiscal year 1996”.

Pub. L. 102–484, § 1052(16)(A)1992—Subsec. (a). , substituted “reserve component” for “Reserve component” after “transfer to a”.

Pub. L. 102–484, § 4422(b)(1)Subsec. (b)(1), (2). , (2), inserted “or full-time National Guard duty or any combination of active duty and full-time National Guard duty” after “active duty”.

Pub. L. 102–484, § 4424(b)(3)Subsec. (b)(3), (4). , redesignated par. (4) as (3) and struck out former par. (3) which read as follows: “if a Reserve, is on the active duty list; and”.

Pub. L. 102–484, § 1052(16)(B)Subsec. (d)(1). , substituted “before ” for “prior to the time this provision is enacted”.

Pub. L. 102–484, § 4406(a)(1)Subsec. (e)(2). , substituted “may elect to have a reduction in the voluntary separation incentive payable for the same period in an amount not to exceed the amount of the basic pay or compensation received for that period.” for “shall forfeit an amount of voluntary separation incentive payable for the same period that is equal to the total amount of basic pay, or compensation, received.”

Pub. L. 102–484, § 4406(a)(2)Subsec. (e)(3). , inserted at end “If the member elected to have a reduction in voluntary separation incentive for any period pursuant to paragraph (2), the deduction required under the preceding sentence shall be reduced accordingly.”

Pub. L. 102–484, § 4406(b)Subsec. (e)(6). , struck out par. (6) which read as follows: “Years of service that form the basis of the payment under paragraph (5) may not be counted in computing eligibility for, or the amount of, annuities under title 5 or any other law providing annuities to Federal civilian employees.”

Pub. L. 102–484, § 4405(b)Subsec. (j). , added subsec. (j).

Statutory Notes and Related Subsidiaries

Effective Date of 2013 Amendment

Pub. L. 112–239, div. A, title X, § 1076(a)126 Stat. 1947Pub. L. 112–81, , , provided that the amendment made by section 1076(a)(9) is effective , and as if included in as enacted.

Effective Date of 2009 Amendment

Pub. L. 111–32section 318(c) of Pub. L. 111–32section 1174 of this titleAmendment by applicable to any repayments of separation pay, severance pay, readjustment pay, special separation benefit, or voluntary separation incentive, that occur on or after , including any ongoing repayment actions that were initiated prior to such amendment, see , set out as a note under .

Effective Date of 2002 Amendment

Pub. L. 107–296section 1704(g) of Pub. L. 107–296section 101 of this titleAmendment by effective on the date of transfer of the Coast Guard to the Department of Homeland Security, see , set out as a note under .

Effective Date of 2000 Amendment

Pub. L. 106–398, § 1 [[div. A]114 Stat. 1654

section 1175(e)(3) of title 10section 1175 of title 10“Subparagraph (B) of , United States Code, as added by subsection (a), shall apply with respect to decisions by members to terminate voluntary separation incentive payments under , United States Code, to be effective after .”
, title V, § 572(b)], , , 1654A–136, provided that:

Effective Date of 1998 Amendment

Pub. L. 105–261, div. A, title V, § 563(c)112 Stat. 2028

section 1175 of title 10“The amendments made by this section [amending this section] apply with respect to any person provided a voluntary separation incentive under , United States Code (whether before, on, or after the date of the enactment of this Act) [].”
, , , provided that:

Effective Date of 1994 Amendment

Pub. L. 103–337section 542(e) of Pub. L. 103–337section 1141 of this titleAmendment by applicable only to members of the Coast Guard who are separated after , see , set out as a note under .

Effective Date of 1992 Amendment

section 4405(b) of Pub. L. 102–484section 4405(c) of Pub. L. 102–484section 1174a of this titleAmendment by applicable as if included in this section as enacted , with any benefits or services payable by reason of applicability of that amendment during the period beginning , and ending , to be subject to availability of appropriations, see , set out as a note under .

Pub. L. 102–484, div. D, title XLIV, § 4406(c)106 Stat. 2707

section 1175 of title 10section 1175 of title 10“The amendments to , United States Code, made by subsections (a) and (b) shall apply as if included in , United States Code, as enacted on .”
, , , provided that:

Payment of Incentives From Voluntary Separation Incentive Fund

Pub. L. 104–208, div. A, title I, § 101(b) [title VIII, § 8044]110 Stat. 3009–71

10 U.S.C. 1175“During the current fiscal year and hereafter, voluntary separation incentives payable under may be paid in such amounts as are necessary from the assets of the Voluntary Separation Incentive Fund established by section 1175(h)(1).”
, , , 3009–98, provided that:

Similar provisions were contained in the following prior appropriation acts:

Pub. L. 104–61, title VIII, § 8054109 Stat. 662, , .

Pub. L. 103–335, title VIII, § 8062108 Stat. 2633, , .

Pub. L. 103–139, title VIII, § 8073107 Stat. 1457, , .

Pub. L. 102–396, title IX, § 9106106 Stat. 1927, , .

Separation Payments; Reductions and Prohibitions

section 1174a of this titleFor provisions reducing, with certain exceptions, amounts received under this section by amounts received as bonus payments under chapter 5 of title 37 in case of members who separate from active duty or full-time National Guard duty in a military department and prohibiting such members from receiving Voluntary Separation Incentive program payments if rehired in DOD civilian position within 180 days of separation, see note set out under .

Tax Treatment of Incentive Payment

Pub. L. 102–190, div. A, title VI, § 662(b)105 Stat. 1398

26 U.S.C. 1section 1175 of title 10“Notwithstanding the Internal Revenue Code of 1986 [ et seq.] and any other provision of law, any voluntary separation incentive paid to a member of the Armed Forces under , United States Code (as added by subsection (a)), shall be includable in gross income for federal tax purposes only for the taxable year in which such incentive is paid to the participant or beneficiary of the member.”
, , , provided that: