Military members who serve in a combat zone (defined below) can exclude certain pay from their income when determining their taxes.

What Can Be Excluded

Enlisted personnel, warrant officers and commissioned warrant officers can exclude the following from their income:

• Active-duty pay earned in any month served in a combat zone
• Imminent danger/hostile fire pay
• A reenlistment bonus if reenlistment was in a month served in a combat zone
• Pay for selling back leave in any month served in a combat zone
• Some other pay received in a combat zone

For officers O-1 and above, the amount of pay subject to the combat zone tax exclusion each month is limited to the monthly basic pay for the senior E-9 of each branch plus the monthly hostile fire pay amount. For 2025, this amount is $10,983.

Partial Month Service in a Combat Zone

Members who serve in a combat zone for at least one day during a month get the combat zone exclusion for the whole month.

Designated Combat Zones

A combat zone is any area the president designates by executive order as an area in which the U.S. Armed Forces are engaging or have engaged in combat. An area usually becomes a combat zone and ceases to be a combat zone on the dates the president designates by executive order.

Arabian peninsula area - beginning Jan. 17, 1991:

• Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude
• Gulf of Aden
• Gulf of Oman
• Persian Gulf
• Red Sea
• The total land areas of Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates

The Kosovo area - beginning March 24, 1999:

• Albania
• Federal Republic of Yugoslavia (Serbia/Montenegro)
• Kosovo
• Adriatic Sea
• Ionian Sea north of the 39th parallel

Afghanistan - beginning Sept. 19, 2001:

Designated Direct Support Areas of a Combat Zone

Some areas outside of combat zones are designated direct support areas. Personnel in these areas maintain, uphold and assist those involved in military operations in a designated combat zone. To qualify for a combat zone tax exclusion, they also are required to be qualified to receive either hostile fire pay or imminent danger pay.

Personnel serving in support of military operations in Afghanistan in the following locations qualify for the combat zone tax exclusion:

• Jordan, Kyrgyzstan, Pakistan, Tajikistan, and Uzbekistan (as of Sep. 19, 2001)
• Djibouti (as of July 1, 2002)
• Yemen (as of April 10, 2022)
• Somalia and Syria (as of Jan. 1, 2004)

Serving in direct support of military operations on the Arabian Peninsula in the following locations:

• Jordan (as of March 2, 2003)
• Lebanon (from Feb. 12, 2015 through Feb. 11, 2020)
• Turkey east of longitude 33.51E (from Sep. 19, 2016)
• Gaza Strip Mediterranean Territorial Seas and Air Space (from March 16, 2023)
• Israel (from March 16, 2023)
• The land area or adjacent littoral waters of the Cooperative Security Location (CSL) Manda Bay, Kenya (from Sept. 26, 2023)

Qualified Hazardous Duty Areas

Members who serve in a qualified hazardous duty area and also receive hostile fire pay or imminent danger pay while performing service in that area are entitled to combat zone tax exclusion.

• Egypt (Sinai Peninsula only) is a qualified hazardous duty area (as of June 9, 2015). 

What Is Service in a Combat Zone?

Service member are considered to be serving in a combat zone if either they're assigned to a combat zone or they qualify for hostile fire/imminent danger pay while in a combat zone. Service in a combat zone includes any periods absent from duty because of sickness, wounds, leave or TAD/TDY, unless leave, TAD/TDY includes the full calendar month.

If, as a result of serving in a combat zone, a person becomes a prisoner of war or is missing in action, that person is considered to be serving in the combat zone so long as he or she keeps that status for military pay purposes.

Nonqualifying Presence in Combat Zone

The following military service does not qualify as service in a combat zone:

• Presence in a combat zone while on leave from a duty station located outside the combat zone.
• Passage over or through a combat zone during a trip between two points that are outside a combat zone, and.
• Presence in a combat zone solely for your personal convenience.

Hospitalized While Serving in the Combat Zone

If you are hospitalized while serving in the combat zone, the wound, disease or injury causing the hospitalization will be presumed to have been incurred while serving in the combat zone unless there is clear evidence to the contrary.

Hospitalized after leaving the combat zone: In some cases the wound, disease or injury may have been incurred while a member was serving in the combat zone, even though hospitalization occurs after they leave. Those members may be eligible for the combat zone tax exclusion as long as hospitalized.

-- Additional reporting by Jim Absher.

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