Tax Benefits
Combat Zone Tax Exclusion (CZTE)
All pay for enlisted/WO is excluded from federal income tax when serving in a designated combat zone. Officers: up to $11,391.90/month excluded.
Who qualifies: Active duty, National Guard.
When serving in a designated combat zone:
• Enlisted and warrant officers: 100% of pay excluded from federal income tax
• Officers (O-1 and above): exclusion capped at the senior E-9 monthly basic pay + hostile fire pay ($11,391.90 in 2026)
• One day in a combat zone = full month excluded
• Also excludes most combat-zone allowances
Tax-free TSP contributions from combat pay are also allowed, with a dramatically higher limit ($72,000/year vs. $24,500 standard limit).