Tax and Income Services
Military tax situations are uniquely complex. Service members may have income from multiple states, tax-free combat zone pay, and allowances that are not considered taxable income. The good news is that several free tax preparation services exist specifically for the military community. Understanding your tax benefits can save you thousands of dollars each year. Basic Allowance for Housing (BAH) and Basic Allowance for Subsistence (BAS) are not taxable, and combat zone pay is tax-exempt for enlisted members. Officers receive a partial exclusion up to the highest enlisted pay rate plus imminent danger pay.
Good to know: If you PCS to a new state, you may need to file taxes in multiple states. Under the Military Spouses Residency Relief Act (MSRRA), your spouse can keep their tax domicile in your state of legal residence even when living in a different state due to military orders.