Combat Zone Tax Exclusion (CZTE)
Verified- Financial
- Government Benefits
- Deployed Support
Pay no federal income tax on money earned in a combat zone.
For any month you serve at least one day in a designated combat zone (or in direct support of one), that month's pay is excluded from federal taxable income. For enlisted and warrant officers the exclusion is unlimited; for commissioned officers it is capped at the highest enlisted pay rate plus hostile fire or imminent danger pay. Many states follow the same rule. It pairs nicely with maxing your Roth TSP, since you are effectively contributing tax-free now and withdrawing tax-free later.
Military Benefit
Federal (and often state) income tax excluded for any month served in a combat zone
How to Claim
Finance applies it automatically based on your location. Confirm it shows correctly on your LES and year-end tax documents.
Eligibility
Active Duty, Guard and Reserve if on orders (serving in a designated combat zone)
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