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.
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.
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Frequently asked questions about Military Tax Deductions and Exclusions
What are Military Tax Deductions and Exclusions?+
These are special tax rules for people in the military and their families. They can help you pay less in federal taxes. This includes things like not paying tax on combat pay, deducting certain moving costs, and knowing that VA disability money is tax-free.
Who can get military tax benefits?+
People who are serving in the military, veterans, and their families can often get these tax benefits. Different benefits apply to different groups. For example, combat pay exclusions are for active duty members, while tax-free VA disability is for veterans.
How do I claim military tax deductions?+
You can claim these deductions when you file your federal tax return. You will need to keep good records of your income and expenses. Some benefits are automatic, like tax-free VA disability. Others, like moving expenses, require you to list them on your tax forms.
What kind of income is tax-free for military members?+
Many types of military pay are tax-free. This includes combat pay, money from VA disability, and some allowances like housing or food. These exclusions mean you do not have to pay federal income tax on that money, helping your finances.