DEFINITION of Combat Pay

Any person enrolled in a branch of the U.S. military that performs his or her duty in federally designated hazardous areas are eligible to receive combat pay. This monthly stipend is in addition to basic pay.

According to Military.com, members of the Armed Services qualify for combat pay if they are: subject to or wounded by hostile fire or explosive mines, or on duty on foreign soil and subject to the threat of physical harm or imminent danger due to civil unrest, civil war, terrorism or wartime conditions. Spending as little as one hour on duty in a hazardous zone still qualifies for an entire month’s combat pay.

Tax Exempt

Additionally, most combat pay is not considered taxable income. However, the recipient must still pay Social Security and Medicare taxes on the annual amount. Individual states set their own rules for taxing this extra pay.

Keep in mind that the Department of Defense can designate some combat zones exempt from the tax break.

Military personnel with dependents also receive a monthly Family Separation Allowance (FSA) any time they are away from their families for 30 or more days. Those serving in combat zones can also deposit up to $10,000 per year into a special savings account that pays a guaranteed 10 percent interest annually. This particular program was established during the Vietnam War.

A Little History

Recognizing combat risks with extra pay originated in World War II. Called “Badge Pay” back then, it was instituted to promote infantry morale. Some areas designated by the DoD as combat zones in the past, according to Militaryhub.com, include:

  • Afghanistan
  • Jordan, Kyrgyzstan, Pakistan, Tajikistan, and Uzbekistan
  • Philippines
  • Djibouti
  • Yemen
  • Somalia and Syria
  • The Federal Republic of Yugoslavia
  • Albania
  • Kosovo
  • The Adriatic Sea
  • The Lonian Sea – north of the 39th parallel
  • The Persian Gulf
  • The Red Sea
  • The total land areas of Iraq, Kuwait, Saudi Arabia, Oman Bahrain, Qatar, and the United Arab Emirates
  • Jordan

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.