Specific components of military pay offer built-in tax advantages. For example, most allowances are tax-exempt and certain hardship circumstances can change normally taxable pay into tax-exempt. Access the following resources for more information on the tax treatment of military pay. 

• Combat Zone Tax Exclusion (CZTE)
  • The CZTE is a provision that exempts all or a portion of earnings from federal income taxes while a Service member is deployed to a designated combat zone. 

• IRS Publication 3, Armed Forces' Tax Guide
  • Publication 3 covers the special tax situations of active members of the U.S. Armed Forces