Tax Resources for Active Duty, Veterans, and Military Families
Military service comes with tax benefits that most civilian taxpayers do not have access to — combat zone exclusions, free filing through MilTax, the only remaining moving expense deduction, and state tax protections under the SCRA. This resource center explains every benefit, shows you how to claim them, and connects you with professionals who understand military tax situations.
Key Military Tax Benefits
MilTax Free Filing
Every active duty service member, spouse, and eligible survivor can file federal and state returns for free through MilTax — no income limits, no form restrictions. The software handles combat zone exclusions, multi-state filing, and PCS moves. Available at MilitaryOneSource.mil.
Combat Zone Tax Exclusion
Military pay earned while serving in a designated combat zone is excluded from federal income tax. For enlisted members and warrant officers there is no dollar limit. Commissioned officers are capped at roughly $10,500 per month. Serving even one day in a combat zone qualifies the entire month.
Military-Specific Deductions
Active duty members retain the moving expense deduction for PCS moves — the only taxpayers who can still claim it. Unreimbursed uniform costs, reservist travel expenses, and certain professional development costs may also be deductible. BAH and BAS are tax-free and do not count as income.
TSP Tax Treatment
The Thrift Savings Plan offers both traditional (pre-tax) and Roth (after-tax) options. Deployed service members get a rare triple tax benefit by contributing to Roth TSP with tax-free combat zone pay — the contributions and all future earnings are never taxed. The 2026 contribution limit is $23,500.
VA Disability Benefits
VA disability compensation is completely tax-free, including monthly payments, Dependency and Indemnity Compensation, and Combat-Related Special Compensation. Veterans receiving both retirement pay and VA disability should verify their retirement pay is correctly reduced to avoid double taxation.
State Tax Exemptions
Under the SCRA, you can maintain your state of legal residence regardless of where the military stations you. Many states fully exempt active duty pay, and the MSRRA lets spouses elect the service member's state for tax purposes. Choosing a no-income-tax state as your domicile can save thousands annually.
In-Depth Military Tax Guide
Military Tax Guide 2026: Benefits, Exclusions, and Free Filing
The complete guide covering combat zone exclusions, MilTax, SCRA protections, TSP strategies, VA disability, state exemptions, deployment extensions, and everything else service members need to know about taxes.
Frequently Asked Questions
Is combat zone pay tax-free?
For enlisted members and warrant officers, all military pay earned during any month you serve in a designated combat zone is excluded from federal income tax with no dollar limit. Commissioned officers have a monthly cap of approximately $10,500 for 2026. You only need to serve in the combat zone for one day during a month for the entire month's pay to qualify.
What is MilTax and is it really free?
MilTax is a free tax preparation and filing program provided through the Department of Defense. It is available to all active duty service members, their spouses, and eligible survivors with no income limits. The software is powered by H&R Block and handles military-specific situations including combat zone exclusions, PCS moves, and multi-state filing.
Can military members still deduct moving expenses?
Yes. Active duty military members who move because of a permanent change of station (PCS) are the only taxpayers who can still claim the moving expense deduction. The Tax Cuts and Jobs Act eliminated the deduction for everyone else, but the military exception remains in effect. Claim it on Form 3903.
Is VA disability compensation taxable?
No. Veterans Affairs disability compensation is completely tax-free at the federal level. This includes monthly disability payments for service-connected conditions, Dependency and Indemnity Compensation for survivors, and Combat-Related Special Compensation. VA disability should not appear as income on your tax return.
How long do deployed service members have to file taxes?
Service members in a combat zone receive an automatic extension of at least 180 days after leaving the combat zone to file their return and pay any taxes owed. No interest or penalties accrue during this extension period. You do not need to file any special form — the IRS tracks combat zone service through Department of Defense records.
Get Help from a Military Tax Specialist
Military tax situations involve unique rules that most tax preparers rarely encounter — combat zone exclusions, multi-state filing under SCRA, TSP optimization, and VA disability interactions. A tax professional experienced with military returns can ensure you claim every benefit you have earned.
Find a Military Tax ProfessionalThis page is for informational purposes only and does not constitute tax, legal, or financial advice. Military tax rules and benefits may change. Consult a qualified tax professional for guidance specific to your situation.