- Tax Allowances for Military Members Serving in a Combat Zone
- Tax Benefits for Military Reservists
- What Deductions Can I Use if I Am in the Military?
- How Much Do Military Credits Increase Social Security Benefits?
- Can I Set Up an Installment Agreement With the IRS to Pay Back Taxes While I Am in a Combat Zone?
- Are Military Unpaid Pay and Allowances Taxable?
Just because you're serving in the military doesn't mean that you aren't going to have to pay the same taxes as everyone else. Military paychecks are subject to deductions similar to civilian ones -- including taxes and deductions for retirement savings. However, if you serve in a designated combat zone, you might be able to escape some of these expenses.
Service members generally pay the same federal income tax as any other American. Your pay stub will show the amount of tax that is taken out in the "Deductions" section, labeled as "FITW" for federal income tax withholding. The "Fed Taxes" section gives you information on how your withholding was calculated, including whether or not any additional tax was taken and how many exemptions were used. Your state income tax will also be listed in the deductions section as "SITW" for state income tax withholding, and the "State Tax" section will provide information on how it was calculated.
The Federal Insurance Contribution Act also applies to military pay. FICA payroll taxes cover your contribution to the Social Security and Medicare systems. As with other types of taxes, they're listed in the "Deductions" section of your pay stub and the details of how they were calculated are printed below in the "FICA Taxes" section.
The military allows you to contribute to the government-sponsored Thrift Savings Plan, which is a retirement savings tool that supplements your military retirement pay. TSP contributions come out of your paycheck. You can also make direct contributions to a charity through your military pay. If you are paying for dental coverage for dependents or for Servicemembers Group Life Insurance, those payments will also show up as deductions.
When you serve in a designated combat zone, your income is free of federal income tax and you'll see a reduced deduction on your pay stub. You will, however, have to pay FICA tax, which has the benefit of increasing the amount of Social Security that you will qualify for in later life. While the areas that are designated as combat zones vary, as of August 2013, they include the Arabian Peninsula and surrounding areas, Kosovo area, Afghanistan, and certain Central Asian and East African nations for troops involved in Operation Enduring Freedom and Operation Iraqi Freedom.
- Defense Finance and Accounting Service: How to Read an Active Duty Air Force Leave and Earning Statement
- Thrift Savings Plan: Purpose and History
- Internal Revenue Service: Military Pay Exclusion -- Combat Zone Service
- Internal Revenue Service: Employers with Employees in a Combat Zone
- Internal Revenue Service: Combat Zones
- Jupiterimages/Creatas/Getty Images