Armed Forces Tax Information

Is my Combat Pay earnings while in a Combat Zone taxable?

A member assigned to or deployed to a combat zone receives "combat pay"( also referred to as "imminent danger pay") at the 2012 rate of $7.50 a day instead of the 2011 rate of $225.00 per month. Being assigned or deployed to a combat zone triggers a tax advantage in some locations. Congress and the President can designat combat zones as "Tax Exempt" areas. Earnings received while in these combats zone are excluded from taxable income. A military member still pays social security taxes and Medicare Tax. Whether or not state tax is excluded is up to the individual state. This exclusion is unlimited for enlisted members and is limited to the maximum enlisted pay amount for officers and warrant officers.>br> In addition to Imminent Danger Pay (Combat Pay), and the tax exclusion, some areas qualify for a special monthly allowance called "Hardship Duty Pay."

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