Military life often comes with unique circumstances, such as deployments, PCS moves, and working across multiple states. It also comes with important tax implications. As tax season approaches, it’s important for servicemembers and their families to stay up to date with the latest military tax benefits, credits, and other key tax considerations for military families.
In addition to federal considerations, you’ll also want to review state-level tax rules, which can change year to year and may vary based on residency, military status, and spousal employment.
The following military-specific federal provisions may help reduce your tax liability or increase your refund, depending on your individual situation:
The Earned Income Tax Credit (EITC) is a refundable federal tax credit intended to support low- to moderate-income taxpayers. For tax year 2025, the credit may be worth up to $8,046, depending on income, filing status, and family size.
Servicemembers who received nontaxable combat pay have the option to include that pay as earned income when determining EITC eligibility. Because different types of military compensation are treated differently for tax purposes, understanding how military pay is taxed can help clarify how this election may affect eligibility or credit amounts. In some situations, including combat pay may result in a larger refund, so it’s helpful to review both approaches when preparing your return.
Pay earned while serving in a Department of War-designated combat zone is generally excluded from federal taxable income. This exclusion applies to certain types of compensation earned during qualifying service and can have a meaningful impact on a servicemember’s overall tax picture.
Because military compensation can include a combination of taxable and non-taxable pay, it may be helpful to review which types of military pay are taxable when preparing your return, particularly when evaluating how exclusions and credits interact.
If you are an active-duty servicemember who moved due to a military order and permanent change of station (PCS), you may be able to deduct unreimbursed moving expenses, such as the cost of transporting household goods, travel, and lodging. Allowances received specifically to cover PCS relocation expenses are generally not considered taxable income.
Tax rules related to PCS moves can intersect with broader policies that affect military families, particularly those who own homes or are navigating frequent relocations. Understanding how these moves fit into the larger picture of tax reform and homeownership can provide helpful context when reviewing your overall financial situation.
Active-duty servicemembers serving in combat zones typically receive automatic extensions to file their federal tax returns and pay any tax due. These extensions can last up to 180 days after the last day of service in the combat zone, helping to ensure deployed servicemembers are not penalized for filing delays related to their service. Note that certain interest rules may still apply.
Military families often move across state lines, which can complicate state income tax filing. Under the Military Spouse Residency Relief Act, eligible spouses may be able to use the same legal state of residence as the servicemember, regardless of where they are physically living due to military orders.
These residency rules are one of several key tax considerations for servicemembers and their families to review each year, particularly when employment, withholding, or residency status changes.
Military families don’t have to navigate tax season alone. Several trusted resources are available to help servicemembers, Veterans, and their families file accurately and understand how military service affects their taxes:
MilTax: Offered through Military OneSource, MilTax provides free tax preparation software and support designed specifically for military-related tax situations. It can be used to file federal and state returns.
Volunteer Income Tax Assistance (VITA): VITA offers free tax help to individuals who generally earn $67,000 or less, people with disabilities, and those who need assistance preparing their own returns. Many VITA locations are available on military installations and are staffed by IRS-trained volunteers.
Tax Counseling for the Elderly (TCE): TCE provides free tax preparation assistance with a focus on retirement-related tax questions, which may be especially helpful for retired servicemembers and Veterans.
IRS Free File: Taxpayers with an adjusted gross income under the IRS threshold may qualify for free online filing tools offered through the Internal Revenue Service.
For an overview of these options and additional support programs, explore our guide to Veteran and military tax resources.
Tax situations can vary widely based on service history, income sources, and family circumstances. While understanding available benefits and rules can help you prepare, it’s always a good idea to consult a qualified tax or financial professional if you have questions about your specific situation.
Staying informed is one of the most effective ways to make smart financial decisions throughout military life. Subscribe to our premium content to receive timely insights, guides, and updates designed specifically for servicemembers, Veterans, spouses, and families — helping you stay ahead of important financial topics not only during tax season, but year-round.