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New Member
posted Mar 9, 2025 9:49:37 AM

How does military deployment affect my federal tax return?

0 2 1915
2 Replies
Expert Alumni
Mar 9, 2025 10:04:15 AM

Listed below are some of the ways a military deployment can affect your taxable income:

 

  • If you are deployed to a combat zone, your combat pay is generally excluded from taxable income. This includes basic pay, reenlistment bonuses, and other special pays received while in the combat zone
  • You may qualify for an automatic extension of time to file your tax return and pay any taxes due if you are deployed in a combat zone or a qualified hazardous duty area
  • Contributions to the TSP made from tax-exempt combat pay are also tax-free when withdrawn.
  • Possible other deductions and credits related to travel, housing, moving, etc.

For more detailed information, you can refer to the IRS Armed Forces' Tax Guide (page 13)  and the Military Wallet guide on tax benefits of deployment

Level 15
Mar 9, 2025 10:16:27 AM

Unless you are actually deployed to an actual designated Combat zone...little to none.  Everything except BAS/BAH and traditional TSP contributions are federally taxed.

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If you are deployed to a designated combat zone, the Combat pay you receive will be deducted from box 1 on that year's W-2 form, and that amount removed will be noted in box 12 with a code "Q".   And you get an extension to file and pay taxes until after you return.

Extension of deadlines — Combat zone service | Internal Revenue Service

 

(But, if you delay filing and return from a Combat area late in 2025, TTX "Online" software cannot be used to file after ~15 October)

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Being deployed to a hazardous duty area is not the same as a designated Combat zone.