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Non-taxable Income for Those in the Armed Services

There are special tax benefits to members of the U.S. Armed Forces. If you or someone you know is in the military, prior to filing a tax return it makes sense to review your situation. Outlined here are some of the more common items that may be excluded from your taxable income.

One of the benefits available to the men and women of our Armed Services and, in many cases, staff supporting them is the ability to exclude items from taxable income. Here is a list of the most common items that may often be omitted from income tax.

Excluded Items
Combat zone pay
  • Compensation for active service while in a combat zone
    Note: Limited amount for officers
Other pay
  • Defense counseling
  • Disability, including payments received for injuries incurred as a direct result of a terrorist or military action
  • 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
  • Uniforms furnished to enlisted personnel
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 (the exclusion is limited as described above)
  • 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
  • Legal assistance
  • Medical/dental care
  • Commissary/exchange discounts
  • Space-available travel on government aircraft

Note: The exclusion for certain items applies whether the item is furnished in kind or is a reimbursement or allowance. There is no exclusion for the personal use of a government-provided vehicle.

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