Selena Garrison, University of Florida
It’s that time of year again: Tax Time. With the many different forms of income that can received by members of the Armed Forces, it is important to know what income is taxable and what income is excluded from taxation.
IRS Publication 3, Armed Forces’ Tax Guide, goes into great detail on this and many other tax-related topics, but this article will give you a basic breakdown of what to include (and exclude) from your gross income.
The following items are included in your gross income, unless this pay is earned during service in a combat zone:
Basic pay
- Active duty
- Attendance at a designated service school
- Back wages
- Cadet/midshipman pay
- Drills
- Reserve training
- Training duty
Special pay
- Aviation career incentives
- Career sea
- Diving duty
- Foreign duty (outside the 48 contiguous states and the District of Columbia)
- Foreign language proficiency
- Hardship duty
- Hostile fire or imminent danger
- Medical and dental officers
- Nuclear-qualified officers
- Optometry
- Other Health Professional Special Pays (for example, nurse, physician assistant, social work, etc.)
- Pharmacy
- Special compensation for assistance with activities of daily living (SCAADL)
- Special duty assignment pay
- Veterinarian
- Voluntary Separation Incentive
Bonus pay
- Career status
- Continuation pay
- Enlistment
- Officer
- Overseas extension
- Reenlistment
Incentive pay
- Submarine
- Flight
- Hazardous duty
- High Altitude/Low Opening (HALO)
Other pay
- Accrued leave
- CONUS COLA
- High deployment per diem
- Personal money allowances paid to high-ranking officers
- Student loan repayment from programs such as the Department of Defense Educational Loan
Repayment Program when year’s service (requirement) isn’t attributable to a combat zone
In-kind military benefits
- Personal use of a government-provided vehicle
Note: Adapted from Publication 3, Armed Forces Tax Guide, Table 1 retrieved from https://www.irs.gov/pub/irs-pdf/p3.pdf Copyright 2019 by Department of the Treasury, Internal Revenue Service.
Though you may have to include these items on your income tax return, they are excluded from your gross income and are not taxable:
Combat pay
- Compensation for active service while in a combat zone. Note: The exclusion for certain officers is limited.
Other pay
- Certain amounts received under the Armed Forces Health Professions Scholarship and Financial Assistance Program payments
- Certain disability retirement pay, including payments received for injuries incurred as a direct result of a terrorist or military action
- Disability severance payments
- Group-term life insurance
- Professional education
- ROTC educational and subsistence allowances
- State bonus pay for service in a combat zone
- Survivor and retirement protection plan premiums
- Uniform allowances
Death allowances
- Burial services
- Death gratuity payments to eligible survivors
- Travel of dependents to burial site
Family allowances
- Certain educational expenses for dependents
- Emergencies
- Evacuation to a place of safety
- Separation
Living allowances
- BAH (Basic Allowance for Housing)
- BAS (Basic Allowance for Subsistence)
- Housing and cost-of-living allowances abroad paid by the U.S. Government or by a foreign government
- OHA (Overseas Housing Allowance)
Moving allowances
- Dislocation
- Military base realignment and closure benefit
- Move-in housing
- Moving household and personal items
- Moving trailers or mobile homes
- Storage
- Temporary lodging and temporary lodging expenses
Travel allowances
- Annual round trip for dependent students
- Leave between consecutive overseas tours
- Reassignment in a dependent restricted status
- Transportation for you or your dependents during ship overhaul or inactivation
- Per diem
In-kind military benefits
- Dependent-care assistance program
- Defense counsel services
- Legal assistance
- Medical/dental care
- Commissary/exchange discounts
- Space-available travel on government aircraft
- Uniforms furnished to enlisted personnel
Adapted from Publication 3, Armed Forces Tax Guide, Table 2 retrieved from https://www.irs.gov/pub/irs-pdf/p3.pdf Copyright 2019 by Department of the Treasury, Internal Revenue Service.
For more information on this topic and a comprehensive guide to taxes for members of the Armed Forces, review the most updated version of the Armed Forces’ Tax Guide, published by the IRS.
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