Learn About Combat Pay in the United States Military
A member assigned to or deployed to a combat zone receives "combat pay" (officially called "imminent danger pay") at the rate of $225.00 per month. Being assigned to or working in a combat zone triggers also triggers a tax advantage, in some locations. Congress and/or the President can be designated combat zones as "Tax Exempt" areas.
Earnings received while in these combats zone are excluded from taxable income. (NOTE: This only applies to Federal Income Tax Withholding (FITW). 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. If you spend a single qualifying day in the combat zone, your pay for the entire month is excluded from taxable income, and you receive $225 in combat pay for that month.
Bonuses and special pays are also excluded from taxable income if within the previously stated limitations and earned in the same month in which you served in a combat zone. For example, an enlisted reenlistment bonus is excluded from taxes if the member reenlists in the same month in which the member served in a combat zone.
Since there is no limitation on amounts excluded for enlisted members, the entire reenlistment bonus would be excluded. As another example, an officer's flight pay would also be excluded from taxable income, but only up to the point which basic pay and the flight pay do not exceed the maximum enlisted pay amount.
In addition to Imminent Danger Pay (Combat Pay), and the tax exclusion, some areas qualify for a special monthly allowance called "Hardship Duty Pay." Military members with dependents also receive " Family Separation Allowance" (FSA) of $250.00 per month, anytime they are away from their families (due to military orders) for 30 days or longer.
Finally, members in a combat zone are authorized to deposit up to $10,000 (per year) of their pay and allowances into a special savings account, that pays a guaranteed 10 percent interest per year. This program was established during the Vietnam era and then phased out at the end of the Vietnam War.
However, it was revived in 1991 during the Gulf War, and the program still exists today. In addition to the combat zones listed below, personnel stationed in Kazakhstan and Turkmenistan are eligible to use the program if they are supporting combat operations in Afghanistan. Here are the currently designated combat zones:
- Angola (scheduled to be removed from the list in Nov 07).
- Bosnia-Herzegovina (scheduled to be removed from the list in Nov 07).
- Croatia (scheduled to be removed from the list in Nov 07).
- Georgia (scheduled to be removed from the list in Nov 07).
- Macedonia (scheduled to be removed from the list in Nov 07).
- Saudi Arabia
- Sierra Leone (scheduled to be removed from the list in Nov 07).
- Serbia (Includes Kosovo)
- Turkey (in some cases)
- United Arab Emirates
- Persian Gulf
- Red Sea
- Gulf of Oman
- Arabian Sea (North of 10 degrees N, and west of 68 Degrees E).
- Gulf of Aden