The information in this article is up to date for tax year 2024 (returns filed in 2025).
As a member of the U.S. Armed Forces, you make countless sacrifices to serve your country. The last thing you should be stressing over is your tax return. Thankfully, the government offers military tax benefits designed to lighten the load, including extended deadlines, pay exclusions, and various deductions.
If you’re in the military, here are some key benefits to keep in mind when it’s time to file your taxes.
Who Is Eligible for Military Tax Benefits?
Military tax benefits are available to various members of the military community, including active duty, reserve, and National Guard personnel. To qualify, you must meet specific criteria, such as being on active duty, serving in a combat zone, or being part of the military community, which includes service members, eligible family members, survivors, and recent veterans.
Combat Pay in Combat Zones Is Not Taxable
You do not have to include combat pay as income on your tax return. Enlisted members, warrant officers, and commissioned warrant officers can exclude all military pay earned while serving in designated combat zones.
This includes:
- Basic pay
- Reenlistment bonuses
- Imminent danger/hostile fire pay
- Student loan repayments
- Pay for accrued leave
Although your income will be excluded from federal taxes, it is still subject to Social Security and Medicare taxes.
Nontaxable Income Counts Toward the Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is worth up to $7,840 for tax year 2024, so claim it if you can. Members of the military can choose to have their nontaxable combat pay included to calculate their EITC. This can help you get a larger credit, resulting in a bigger tax refund.
If your earned income without your combat pay is less than the amounts below, it may be beneficial to include it.
- $8,260 if you have no qualifying children
- $12,390 if you have one qualifying child
- $17,400 if you have two or more qualifying children
The IRS suggests calculating the credit both ways to make your decision. Don’t worry, even if you include your combat pay for the credit, it’s still nontaxable. File your tax returns with ezTaxReturn, and we’ll do the math for you.
Some Moving Expenses Can Be Written Off
When you are in the military, you may have to move around a lot as part of military life. If you move due to a permanent change of station, you can deduct some of the unreimbursed moving expenses for you and your family. Eligible expenses include the cost of moving household goods (not furniture) and travel from your old home to your new one.
Travel Expenses Are Deductible for Reservists
If you are stationed more than 100 miles from home to perform Reserve duties, you can deduct the unreimbursed travel expenses on your tax return. Be sure to keep your receipts and track of every penny you spend from the moment you leave until you return.
Penalty-Free Withdrawals From Retirement Accounts
Normally, when you tap into your retirement plan before age 59 ½, you’ll pay taxes on the distribution plus an additional 10% tax. However, qualified reservists may be able to take early withdrawals from their 401k and IRA without penalty.
To qualify for the exception, you must meet the following requirements:
- You were called to active duty for 180+ days.
- You must take the distribution while on active duty.
Service members who withdraw funds from their qualified retirement accounts must wait at least six months to make new contributions.
More Time to File Your Tax Return
Some members of the military receive an extended deadline for filing taxes and paying their taxes. If you are stationed outside of the U.S. or Puerto Rico, you’re entitled to an automatic two-month extension without filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. If you’re serving in a combat zone, you won’t have to file or pay any owed taxes until at least 180 days after leaving the combat zone. File your taxes the easy way with ezTaxReturn!
State-Specific Tax Benefits
In addition to federal tax benefits, many states offer their own tax benefits specifically for military personnel. These state-specific benefits can significantly reduce your tax burden and vary widely from state to state. They may include exemptions from state income tax, reduced tax rates, or special deductions tailored to the needs of military personnel.
Common state-specific tax benefits for military personnel include:
- Exemptions from state income tax on military pay
- Reduced tax rates on military income
- Special deductions for military-related expenses, such as moving costs or uniform expenses
- Exemptions from state taxes on military retirement income
To determine which state-specific tax benefits you may be eligible for, it’s essential to consult with a tax consultant or financial advisor. They can help you navigate your state’s tax laws and ensure you are taking advantage of all available benefits.
The Death Gratuity Paid to Survivors Is Not Taxable
Losing a loved one can be devastating, both emotionally and financially. To help deal with the financial hardship, the Department of Defense provides a death gratuity to the next of kin of service members who die while on active duty. The one-time lump sum payment of $100,000 is tax-free.
Easy Tax Filing for Military Personnel
For military personnel seeking a simple and efficient way to file taxes, ezTaxReturn provides an intuitive, user-friendly platform. Designed to streamline the tax filing process, this online service offers clear instructions and secure e-filing options. Ideal for service members who prefer to handle their taxes independently, ezTaxReturn eliminates the need for extra software or in-person assistance. With built-in accuracy checks and a focus on maximizing deductions, the platform ensures military personnel can fully take advantage of their tax benefits.
The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as, legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.
