Taxable Military Income

 

If you’re in the military, there are are specific rules about what you must report to the IRS as income.

Unless you received payment for service in a combat zone, include these items in your reported gross income:

  • Basic pay:
    • Active duty
    • Attendance at designated service school
    • Back wages
    • Drills
    • Cost-of-living allowances in the continental United States
    • Reserve training
    • Training duty
  • Special pay:
    • Aviation career incentives
    • Career sea
    • Diving duty
    • Foreign duty outside the 48 contiguous states and District of Columbia
    • Foreign language proficiency
    • Hardship duty
    • Hostile fire or imminent danger
    • Medical and dental officers
    • Nuclear-qualified officers
    • Optometry
    • Pharmacy
    • Special-duty assignment pay
    • Veterinarian
    • Special compensation for assistance with activities of daily living (SCAADL)
    • Voluntary separation incentive
  • Bonuses:
    • Career status
    • Enlistment
    • Officer
    • Overseas extension
    • Reenlistment
  • Incentive pay:
    • Submarine
    • Flight
    • Hazardous duty
    • High altitude/low opening (HALO)
  • Other payments:
    • Accrued leave
    • Personal money allowances paid to high-ranking officers
    • Student loan repayment from programs like the Department of Defense Educational Loan Repayment Program — only when the required year’s service isn’t spent in a combat zone
    • High-deployment per diem

You also can’t exclude personal use of a government-provided vehicle.

Military taxpayers who receive tax-free combat pay can continue to include it as earned income for purposes of:

  • Earned Income Credit (EIC)
  • Additional child tax credit

To learn more, see these tax tips:

  • Military Income Exclusions
  • Combat Zone Exclusions
  • Military Moving Expenses
  • Military Extensions

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