Combat Zone Service

Combat Zone Service means:
the exclusion from taxable income of certain pay received by members of the U.S. armed forces while serving in a combat zone. Excludable pay generally includes:

• active duty pay.

• dislocation allowance.

• reenlistment bonus.

• accrued leave pay.

A combat zone is any area designated by the President as an area in which U.S. armed forces are engaging or have engaged in combat. The President also designates the dates when the area becomes a combat zone and ceases to be a combat zone. Former IRC (check if this IRC provision is current here) §§112 and 3401(a)(1).

Combat Pay is pay received by members of the U.S. Armed Forces and support personnel in combat zones, including peace-keeping efforts. Military pay received by enlisted personnel serving in combat or designated peace-keeping efforts is tax-free. Officer pay is tax-free up to the maximum pay for enlisted personnel.