Hey guys. So I've been contemplating joining the military after high school, and I've landed on a very specific question that I can't seem to find a solution to. Does anyone here know if your military pay gets taxed while you're deployed? I'd greatly appreciate any input.
Yes, the military pay you receive while you're deployed is generally subject to federal income tax. However, there are certain exceptions which make a portion or all of your income tax-free.
For instance, a significant benefit for service members is the Combat Zone Tax Exclusion. Here, if as a military personnel, you serve in a congressionally designated combat zone, then your combat pay, or a part of it, will be exempt from federal taxes. For enlisted members, warrant officers, and limited duty officers, the exclusion is applicable to all military pay earned while serving in the combat zone. Commissioned officers too can exclude their pay but it's capped at the highest enlisted pay level plus any hostile fire or imminent danger pay received.
Outside of a combat zone, if you're stationed abroad and meet certain requirements, you might qualify for the Foreign Earned Income Exclusion, which allows you to sizeably exclude foreign earnings from income for federal tax purposes.
It's recommended to consult with a tax advisor or professional familiar with military tax issues for complete and personalized tax guidance. This way, you can make certain that you access all relevant tax benefits that pertain to your situation. Keep in mind that income tax rules can change and vary by state, so it's important to stay informed.
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