Air Force and your taxes

What the federal rules say

• 26 U.S.C. § 112 provides an exclusion from gross income for certain compensation received by members of the Armed Forces for months of service in a combat zone.
• The IRS describes the combat zone exclusion as separating enlisted members and warrant officers, whose military pay for a qualifying month is described as excludable in full, from commissioned officers, whose exclusion the IRS and 26 U.S.C. § 112 describe as capped by reference to the highest rate of enlisted basic pay plus hostile fire or imminent danger pay.
• The IRS states that entitlement to the compensation must have fully accrued in a month during which the member served in a designated combat zone or was hospitalized as a result of wounds, disease or injury incurred while serving in a designated combat zone, and that one or more days of service in a combat zone during a month counts as a full month for the exclusion.
• The IRS states that military pay earned while serving in a combat zone remains subject to Social Security and Medicare taxes even where it is excluded from income tax, and that the exclusion is applied administratively by the military pay system on the Form W-2 rather than by a separate claim.
• Combat zones are areas designated by Executive Order or by statute, and the IRS publishes the list of designated combat zone localities it applies for federal tax purposes.
• 26 U.S.C. § 7508 postpones the time for performing specified federal tax acts by reason of service in a combat zone or a contingency operation.
• IRS Publication 3 describes extensions of the deadline for filing federal returns and paying federal tax that apply by reason of combat zone or qualifying contingency operation service.
• IRS Publication 3 also describes an extension of the filing deadline for taxpayers living outside the United States and Puerto Rico, a category that can include service members stationed abroad.
• IRS Publication 3 separates military compensation into items included in gross income, such as basic pay, and items excluded from gross income, such as certain allowances.
• 26 U.S.C. § 134 excludes qualified military benefits from gross income, a category the statute defines by reference to benefits provided under laws administered for members of the uniformed services.
• The Department of Defense and DFAS publish the official descriptions of military pay and allowance types, including basic pay and housing and subsistence allowances.
• IRS Publication 3 lists the Basic Allowance for Housing among the allowances it identifies as excluded from gross income, and the Department of Defense publishes the official description of that allowance.
• IRS Publication 3 lists the Basic Allowance for Subsistence among the allowances it identifies as excluded from gross income, and the Department of Defense publishes the official description of that allowance.
• The IRS describes several categories of combat-zone related compensation, including basic pay, reenlistment or continuation bonuses, imminent danger or hostile fire pay, certain student loan repayment amounts, leave sold that was earned in a combat zone, and awards, as items that can fall inside the combat zone exclusion.
• 26 U.S.C. § 217(g) preserves a moving expense deduction for members of the Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station.
• Form 3903 is the IRS form used to report moving expenses, and its instructions address the Armed Forces provision separately from the general suspension of the deduction.
• IRS Topic no. 455 describes the Armed Forces moving expense provision as covering an active duty move due to a military order and incident to a permanent change of station, and describes the covered moves as including a move to a first post of active duty, a move between permanent posts of duty, and a move from a last post of duty to a home or nearer point in the United States.
• IRS Topic no. 455 describes unreimbursed qualified moving expenses as reported on Form 3903 and deducted as an adjustment to income, and states that moving expenses covered by government reimbursement or payment excluded from income are not also deductible.
• Form 8822 is the IRS form for notifying the IRS of a change of home mailing address, which is the federal procedure that exists when an address on file with the IRS changes after a relocation.
• 50 U.S.C. § 4001 addresses residence for state tax purposes for servicemembers, providing that a servicemember neither loses nor acquires a residence or domicile for tax purposes solely by reason of absence or presence in a state in compliance with military orders.
• 26 U.S.C. § 162(p) provides a rule for travel expenses of members of a reserve component of the Armed Forces in connection with service more than 100 miles away from home.
• 50 U.S.C. § 4001 also addresses the residence of a servicemember's spouse for state tax purposes and includes an election provision concerning the residence used for those purposes.
• IRS Publication 525 treats military retirement pay as pension income for federal purposes, and DFAS administers retired pay and issues the associated year-end statements.
• 26 U.S.C. § 104 excludes from gross income certain amounts received as compensation for injuries or sickness, including amounts described in the statute for personal injuries or sickness resulting from active service in the armed forces.

Where to go next

Primary sources

• 26 U.S.C. § 112 — Certain combat zone compensation of members of the Armed Forces Office of the Law Revision Counsel, U.S. House of Representatives — Prelim edition
• Publication 3, Armed Forces' Tax Guide Internal Revenue Service — 2025 returns edition
• Tax exclusion for combat service Internal Revenue Service — Retrieved 2026-08-14
• Combat zones — designated combat zone localities and tax provisions Internal Revenue Service — Retrieved 2026-08-14
• 26 U.S.C. § 7508 — Time for performing certain acts postponed by reason of service in a combat zone Office of the Law Revision Counsel, U.S. House of Representatives — Prelim edition
• Publication 525, Taxable and Nontaxable Income Internal Revenue Service — 2025 returns edition
• 26 U.S.C. § 134 — Certain military benefits Office of the Law Revision Counsel, U.S. House of Representatives — Prelim edition
• Military compensation — allowances U.S. Department of Defense — Retrieved 2026-08-14
• Military member pay and entitlements Defense Finance and Accounting Service — Retrieved 2026-08-14
• 26 U.S.C. § 217 — Moving expenses, including subsection (g) for members of the Armed Forces Office of the Law Revision Counsel, U.S. House of Representatives — Prelim edition
• Instructions for Form 3903, Moving Expenses Internal Revenue Service — Current form revision
• Topic no. 455, Moving expenses for members of the Armed Forces and the Intelligence Community Internal Revenue Service — Retrieved 2026-08-14
• About Form 8822, Change of Address Internal Revenue Service — Current form revision
• 50 U.S.C. § 4001 — Residence for tax purposes (Servicemembers Civil Relief Act) Office of the Law Revision Counsel, U.S. House of Representatives — Prelim edition
• 26 U.S.C. § 162(p) — Treatment of expenses of members of reserve components of the Armed Forces Office of the Law Revision Counsel, U.S. House of Representatives — Prelim edition
• Retired military pay administration Defense Finance and Accounting Service — Retrieved 2026-08-14
• 26 U.S.C. § 104 — Compensation for injuries or sickness Office of the Law Revision Counsel, U.S. House of Representatives — Prelim edition
• VA disability compensation U.S. Department of Veterans Affairs — Retrieved 2026-08-14

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General education, built from primary government sources. Rules change, and your own facts matter. This is not individualized tax or legal advice.