Military Tax Deductions and Exclusions — military tax breaks
Federal tax benefits available to active duty service members, veterans, and their families, including combat pay exclusions, moving expense deductions.
Official source: irs.gov
Combat Pay Exclusion: all pay earned in a designated Combat Zone is excluded from federal income tax for enlisted members.
Military Moving Expense Deduction: active duty members ordered on a PCS move can deduct unreimbursed moving costs (preserved for military when suspended for civilians in 2018).
VA Disability Compensation: entirely tax-free at the federal level and in most states.
MilTax: free tax prep software and filing assistance offered by the DoD for service members and veterans. → Veterans should NOT report VA disability compensation on their federal tax return -- it is not reportable income.
In real life
- A service member can get combat pay tax-free when deployed to a combat zone.
- Someone who moves for a permanent change of station can deduct some moving costs from their taxes.
- A veteran does not pay taxes on money received from VA disability compensation.
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Frequently asked questions about Military Tax Deductions and Exclusions
What is Military Tax Deductions and Exclusions?+
Federal tax benefits available to active duty service members, veterans, and their families, including combat pay exclusions, moving expense deductions, and the tax-free status of VA disability compensation. Combat Pay Exclusion: all pay earned in a designated Combat Zone is excluded from federal income tax for enlisted members.
Who qualifies for Military Tax Deductions and Exclusions?+
Veterans (and in some cases their dependents or survivors) who meet the program's specific service, discharge, and eligibility rules. Use the BK Calculator and Filing Success Score to check your situation.
How do I apply for Military Tax Deductions and Exclusions?+
Apply at va.gov (search for the program by name) or work with a free accredited Veterans Service Officer (VSO) through your state VA office.
Where can I get help?+
Use BenefitKarma's free Benefit Eligibility Screener to see what VA benefits you may have missed, or talk with a free accredited Veterans Service Officer (VSO) through your state VA office.
Source: irs.gov