Combat Pay Tax Exclusion Calculator

No -- CZTE excludes qualifying combat zone pay from federal (and typically state) INCOME tax only. Social Security and Medicare (FICA) taxes are still withheld on combat zone pay exactly as they would be on any other military pay, per IRS Publication 3, the Armed Forces' Tax Guide. This also means combat zone service still counts toward your Social Security earnings record the same as non-combat pay does.

No -- this calculator models the enlisted and warrant officer case, where all qualifying combat zone pay is excluded. Commissioned officers instead get a CAPPED exclusion, limited to the highest rate of enlisted basic pay for the month plus hostile fire/imminent danger pay, so any officer pay above that cap remains taxable. An officer earning well above the enlisted pay scale will see this calculator overstate their actual tax savings.

State income tax treatment of combat pay varies -- most states that tax income at all follow the federal CZTE exclusion, but the rate you'd actually save at depends on your specific state's brackets, and several states where service members are commonly stationed or maintain legal residency (Texas and Florida, for example) levy no state income tax at all. This calculator applies a generic 5% average-state-rate placeholder, so check your own state's actual treatment for a precise number.

Roth TSP contributions are already made with after-tax dollars, but during a CZTE deployment your combat pay is tax-free federal income to begin with -- so you can put money into a Roth TSP that was never taxed at all, and it then grows and can be withdrawn tax-free in retirement under normal Roth rules. That combination (never-taxed contribution, tax-free growth) is a distinctive advantage unavailable outside a combat zone, which is why many financial counselors highlight maximizing Roth TSP contributions during deployment specifically.