Combat Pay

AAA

DEFINITION of 'Combat Pay'

A tax-free form of compensation paid to members of the armed forces who are on active duty in a designated combat zone or hazardous duty area. Combat pay includes active duty pay, dislocation allowances, reenlistment bonuses, achievement awards, pay for accrued leave and other miscellaneous types of compensation that are paid as a result of military service.

BREAKING DOWN 'Combat Pay'

Military personnel who serve in a combat or hazardous duty zone for any time during the month will receive tax-free combat pay for that entire month. If they are hospitalized as a result of injury or illness of any kind that was received in one of these zones, then their pay received during convalescence will be excluded.

RELATED TERMS
  1. Heroes Earned Retirement Opportunities ...

    Legislation passed by Congress on May 18, 2006, that allows tax-free ...
  2. War Bond

    Debt securities issued by a government for the purpose of financing ...
  3. Combat Zone

    An area designated as a war zone during a specified period. Members ...
  4. Political Risk

    The risk that an investment's returns could suffer as a result ...
  5. Exempt Income

    Certain types or amounts of income not subject to federal income ...
  6. Sticky Wage Theory

    An economic hypothesis theorizing that pay of employees tends ...
Related Articles
  1. Personal Finance

    Preparing Finances For Deployment: A Guide For Service Members

    Those who follow the instruction in this article can look forward to a homecoming of financial prosperity.
  2. Taxes

    3 Retirement Account Rules To Know

    Stay up-to-date on regulation amendments to avoid penalties as well as take advantage of new opportunities.
  3. Retirement

    Benefits for Members of the Armed Forces

    If your plans have been affected by your time in the combat zone, fear not!
  4. Personal Finance

    How to Job Search While You're Still Employed

    The best time to look for a new job is when you already have one.
  5. Personal Finance

    How To Get That Entry-Level Financial Analyst Job

    Landing a job as a financial analyst takes study, strategy and a lot of hard work. Here's how to hone your competitive edge.
  6. Savings

    All About Income

    Income is the money you or a business earns by providing goods or services, or through investments.
  7. Taxes

    Top Tips for Minimizing Taxes on Severance Pay

    A look at the top ways to lessen the tax burden on severance pay.
  8. Professionals

    8 Justifications For Sky-high CEO Salaries

    Why are CEO salaries so astronomically high? There may be more to the story than you think.
  9. Taxes

    Are You Paying Too Much in Taxes?

    Overpaying taxes amounts to an interest-free loan to the government. Here are some ways to avoid that scenario.
  10. Insurance

    Tips for Insuring Your Salary

    Those with high incomes really can’t afford to be without disability insurance. Here's why.
RELATED FAQS
  1. Are there special benefits for U.S. armed forces personnel?

    If you are a member of the military, you may be afforded special tax benefits that might not be available to other taxpayers. ... Read Full Answer >>
  2. Does my employer's matching contribution count towards the maximum I can contribute ...

    Contributions to 401(k) plans come from employee salary deferral and employer match dollars. According to the IRS, employees ... Read Full Answer >>
  3. How is marginal propensity to save calculated?

    Marginal propensity to save is used in Keynesian macroeconomics to quantify the relationship between changes in income and ... Read Full Answer >>
  4. Why should investors research the C-suite executives of a company?

    C-suite executives are essential for creating and enacting overall firm strategy and are therefore an important aspect of ... Read Full Answer >>
  5. How does the always be closing (ABC) strategy benefit a salesperson's sales funnel?

    It is good practice in sales to always be closing, because it's common for a salesperson's sales funnel to be leaky. When ... Read Full Answer >>
  6. How reliable or accurate is marginal analysis?

    Marginal analysis is designed to show how economic reasoning allows actors to accomplish more by understanding limits on ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Recession

    A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, ...
  2. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  3. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  4. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  5. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  6. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!