Combat Zone

What Is a Combat Zone?

A combat zone is an area designated as a war zone during a specified period of time for the purposes of reporting to the Internal Revenue Service (IRS) by military personnel. While working in a combat zone, members of the military receive a number of tax benefits.

Understanding a Combat Zone

The IRS formally defines a combat zone as "any area the President of the United States designates by Executive order as an area in which the U.S. Armed Forces are engaging or have engaged in combat. An area usually becomes a combat zone and ceases to be a combat zone on the dates the President designates by Executive order."

Military members are allowed to exclude from gross income reporting to the IRS any compensation earned during service in a combat zone. They also may exclude reenlistment bonuses, pay for accrued leave, and miscellaneous items (e.g., awards) received during periods in a combat zone. However, the amount of exclusion is limited to the highest rate of enlisted pay plus "imminent danger/hostile fire" pay for each month during any part of which a military personnel served in a combat zone, or was hospitalized as a result of service in a combat zone.

Special Considerations

Current Recognized U.S. Combat Zones

The U.S. is not actively engaged in actual combat in all of the countries on the combat zone list. The list also includes combat support areas and contingency operations areas. As of 2020, the U.S. has four active combat zones: Sinai Peninsula, Afghanistan area, Kosovo area, and the Arabian Peninsula area.

Under the 2017 Tax Cut and Jobs Act, the Sinai Peninsula was included in the list of recognized combat zones. Members of the U.S. Army, U.S. Navy, U.S. Marines, U.S. Air Force, and U.S. Coast Guard who performed services in the Sinai Peninsula can now claim combat zone tax benefits.

The Afghanistan area encompasses Jordan, Kyrgyzstan, Pakistan, Tajikistan, and Uzbekistan, Philippines, Djibouti, Yemen, Somalia, and Syria. This area was designated beginning in 2001. After Afghanistan, other geographic areas were certified by the Department of Defense for combat zone benefits because of their direct support of military operations in Afghanistan.

The Kosovo area was designated as a combat zone beginning in 1999. This area includes the Federal Republic of Yugoslavia (Serbia/Montenegro), Albania, Kosovo, the Adriatic Sea, and the Ionian Sea (north of the 39th parallel).

Finally, the Arabian Peninsula area was ordered as a combat zone beginning in 1991. This area includes the Persian Gulf, the Red Sea, the Gulf of Oman, the part of the Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude, the Gulf of Aden, the total land areas of Iraq, Kuwait, Saudi Arabia, Oman Bahrain, Qatar, the United Arab Emirates, Jordan, and Lebanon.