"The Yellow Badge of Cowardge" is the twenty second episode of season 25 and the season finale.
Bart is plagued with guilt when he becomes the winner of the annual "last day of school" race around Springfield Elementary, with an assist from Nelson, who beats up frontrunner Milhouse. Meanwhile, Homer tries to bring back the annual Fourth of July fireworks display after it is canceled for budget reasons.
In a story narrated by Lisa, Bart wakes up the family by banging pots and pans together, since it is the last day of school. Homer discovers while reading the local newspaper that the Fourth of July fireworks has been cancelled due to the fact that the city is broke. He sets off to find the man who performed firework shows when he was a child.
Meanwhile, Springfield Elementary has their annual Field Day festivities, where the kids learn to balance eggs on spatulas and have their ankles tied to someone who don't care about them. During the egg toss, the objective is to make one toss to one's partner, but each pair hurls their eggs at Principal Skinner. A race around the school prompts everyone to do the best, including Milhouse, who reveals to Bart that he has been secretly practicing for this race, and Martin overhears the secret.
As each student runs during the race, Milhouse leads the pack before Nelson and the bullies plan to knock some sense out of him. When Nelson waits for Milhouse at the pivotal turn of the race, he hands Milhouse a cup of water before punching him. Bart observes this activity, but runs ahead of the race to win first place. After Bart receives a blue ribbon for first place, Milhouse emerges from the bushes with amnesia conveniently. Although Bart has several opportunities to disclose to Milhouse that he could have won the race with the help of his best friend, Bart lets that opportunity slip by even at a town ceremony honoring him. However, when one of the bullies slingshots at Milhouse's forehead, the memories come rushing back to where Bart just stood idly by as Milhouse suffered beating after beating.
Outraged townspeople chase Bart away from the ceremony. Bart goes to the retirement home to seek help from Grampa without much luck. Elsewhere, Homer finds Giuseppe, a man from his past who conducted firework shows, to execute a spectacular fireworks display for the town, but a fight breaks out when Giuseppe tells him that fireworks should start when the crowd gets irritated waiting and that America should really celebrate July 2 as the day of independence. They level the fireworks towards the crowd. The fireworks scatter, yet Bart quickly thinks on his feet by stealing the Springfield Retirement Castle's handicap bus and driving it in front of the crowd, shielding them from the fireworks. He then sneaks out the back as Milhouse emerges from the bus, the crowd believing Milhouse saved them, which was Bart's plan all along.