How to Pay Military Taxes While Deployed
Caitlyn is a freelance writer from the Cincinnati area with clients ranging from digital marketing agencies, insurance/finance companies, and healthcare organizations to travel and technology blogs. She loves reading, traveling, and camping—and hanging with her dogs Coco and Hamilton.Read full bio
At a Glance
Just like civilians, members of the armed forces must pay federal taxes. While the Internal Revenue Service (IRS) attempts to minimize the difficulties for active-duty personnel, there are many types of pay and allowances in the military with different tax rules and regulations.
In this article, learn more about:
Do the military pay taxes?
Whether the military pays taxes depends on if it’s military pay (and what type of military pay), allowances, or bonuses. Military pay differs from military allowances, which are also different from things like hazardous duty pay, reenlistment bonuses, or tuition benefits.
For example, almost all military pay is subject to federal income tax, as is the military allowance called the Cost of Living Allowance (COLA) (when it is stateside). Military retirement income can be taxed at either the state or federal level; however, most states offer a complete tax break, or some form of tax exemption for retirement pay.
Most other military allowances are not subject to federal taxation, including:
- The housing allowance
- Separate rations allowance
- Basic allowance for subsistence (BAS)
- Clothing allowance
Veterans who have separated from the military and suffer combat-related injuries are offered tax relief under the Combat-Injured Veterans Tax Fairness Act of 2016, which means they are not federally taxed on the Department of Defense one-time disability severance payment. Income earned while serving in a combat zone or direct support of operations in a combat zone is also excluded from income taxes.
Disability pay is also usually given a tax-exempt status.
Additionally, some tax breaks are affected by non-taxable military allowances. For example, veterans can claim a tax deduction for military uniforms you cannot wear when serving or off duty.
There are also other benefits when it comes to taxes, such as:
- Service members on extended duty can request automatic withholding of their federal taxes
- A spouse can file tax returns on behalf of a deployed service member
Related: Should I Use My Tax Refund to Pay Off Debt
It’s important to remember that state and federal tax guidelines change on a regular basis, so talk with a tax professional to learn more about your particular situation and ensure you’re up-to-date with the regulations.
Military tax filing
At tax filing, there are a number of things that are considered taxable military pay/benefits, as well as money that’s not added to your gross income. Military pay is considered types of income that may be included in your gross income at federal tax time (unless earned in a combat zone) and includes:
- Active duty pay
- Reserve training pay
- Guard drill pay
- Special-duty assignment pay
- Aviation career incentive pay
- Diving duty pay
- Foreign duty pay
- Medical, dental, pharmacy, optometry, and veterinarian pay
- Nuclear-qualified officers pay
- enlistment/reenlistment bonuses
- Officer pay
- Career status pay
- High deployment per diem
- Cashed-in accrued leave
- Student loan repayment
Military money that does not have to be reported at tax time includes:
- Basic allowance for housing (BAH)
- COLA (while living overseas)
- Overseas housing allowance
- Dependent care assistance
- Family separation pay
- Dislocation allowance
- Relocation or storage of household goods
- Mobile home, trailer, or automobile shipment during PCS moves
- Temporary lodging allowance (TLA)
- Burial services
- Travel of dependents to burial site
- Death gratuity payments to eligible survivors
- Medica/dental care
While members of the military have the same tax filing deadline in mid-April, there are some privileges that allow them to extend that deadline without being penalized. For example, those who are stationed overseas during tax season are granted a two-month extension to pay their taxes. Additionally, service members who have served in a combat zone recently have an additional 180 days (about 6 months) after returning home, plus the equivalent amount of time served in the combat zone, before filing.
For any time spent hospitalized due to injuries sustained in a combat zone, an extension of up to five years is granted.
These extensions apply to (but are not limited to):
- Filing any return of income tax, estate tax, gift tax, employment tax, or excise tax
- Paying of any income tax, estate tax, gift tax, employment tax, or excise tax
- Collection by the IRS of any tax due
- Filing a petition with the Tax Court for redetermination of a deficiency or for review of a decision
- Filing a claim for credit or refund of any tax
- Making a qualified retirement contribution to an IRA
- Assessment of any tax by the IRS
- Giving or making any notice or demand by the IRS for the payment of any tax, or for any liability for any tax
- Bringing suit by the U.S. for any tax due
When it comes to filing taxes, some online tax preparation services and national tax companies offer assistance in preparing military taxes. Most military bases also have volunteers who will help service members or their spouses compile and file federal and state income tax. The IRS and Department of Veterans Affairs also offer free tax preparation services to military veterans.
Commonly asked questions
Are soldiers exempt from taxes?
Some military allowances are not subject to federal taxation such as the housing allowance, separate rations allowance, and basic allowance for subsistence. Disability pay is also not taxed at the federal level. However, there are a number of things that are considered taxable military/pay benefits, so soldiers are not exempt from all taxes.
How much of military pay is taxed?
Soldiers must pay federal taxes and report items as gross income such as basic pay, reserve training pay, guard drill pay, special-duty assignment pay, and others (see full list above).
Do soldiers pay taxes when deployed?
Soldiers who are stationed overseas during tax season are granted a two-month extension to pay their taxes. Additionally, service members who have served in a combat zone recently have an additional 180 days after returning home, plus the equivalent amount of time served in the combat zone, before filing. For any time spent hospitalized due to injuries sustained in a combat zone, an extension of up to five years is granted.
Do soldiers file taxes?
Yes, soldiers must file taxes at tax-time unless they are deployed overseas or meet other criteria. They can do so with assistance from online tax filing services, the IRS, Department of Veterans Affairs, or services offered on base by the military.