Savings, Retirement and Tax Benefits
- Combat Zone Tax Exclusion (CZTE)
Members performing duty in, or in direct support of a combat zone (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), are able to exclude portions of their income from federal and state taxation. Presidential Executive Order determines combat zones and the applicable dates. Earnings received while performing duties in, or in direct support of areas designated as a combat zone are excluded from taxable income. This exclusion is unlimited for enlisted members and warrant officers but for commissioned officers the amount is limited to the maximum CZTE in effect for a qualifying month (the sum of the highest rate of enlisted basic pay and the amount of hostile fire/imminent danger pay actually payable to the officer for the qualifying month). Current CZTE Rates
- Savings Deposit Program (SDP)
Active duty and Reserve component members may be authorized to participate in the SDP during assignments and deployments to specified locations in support of contingency operations. The program provides an interest rate of 10% and allows service members to contribute any portion of their un allotted current pay and allowances up to a maximum amount of $10,000. Interest paid on the amounts deposited into the SDP is taxable. Specific rules and limitations apply. Contact your local finance office prior to deployment. Savings Deposit Program Details
- Thrift Savings Plan (TSP)
The TSP provides military members with a savings plan that allows members to contribute pre tax dollars thereby reducing current taxes, and to accumulate long term, tax deferred savings and earnings, which can supplement future retirement income. Participation is painless through payroll deduction, and account management is easy via worldwide web interface. The open seasons are eliminated and members can accomplish any action at any time. The Internal Revenue Code places an annual limit on elective deferrals, including tax deferred employee contributions to the TSP. Since 2008, the elective deferral limit has been set at $15,500. The TSP in conjunction with the military pension and Social Security retirement benefits can provide for a great retirement. Beginning in January 2012, military members will be able to enjoy the same benefit of contributing to a Roth or pre tax version of TSP as a civilian.
- Federal Tax Advantage
Military personnel receive additional indirect compensation because some allowances are not taxable. These allowances include BAS, BAH, Overseas Housing Allowance (OHA), Cost of Living Allowance (COLA), and Family Separation Allowance (FSA). Members are eligible for further tax advantages of basic pay and other special pays through participation in the Uniformed Services Thrift Savings Plan (TSP).
- Tax Assistance (VITA) Program
The military has a strong Volunteer Income Tax Assistance (VITA) Program. The Armed Forces Tax Council (AFTC) consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps, and Coast Guard. The AFTC oversees the operation of military tax programs worldwide and serves as the main conduit for outreach by the IRS to military personnel and their families. Service members and their families worldwide receive free tax preparation assistance at offices within their installation. These VITA sites provide free tax advice, tax preparation, and assistance to military members and their families. They are trained and equipped to address military specific tax issues. Pay and Compensation Calculator
Vacation, Leave and Time Off
- Morale Welfare and Recreation (MWR)
The Army Morale, Welfare and Recreation Division administers a varied program of recreation, social and community support activities on U.S. Army facilities worldwide. MWR programs provide active duty, reserve and retired Army personnel and their families with sports and physical fitness activities, child development and youth programs, and a variety of food and beverage services. MWR’s mission is to provide quality support and recreational services that contribute to the retention, readiness, mental, physical, and emotional well being of Soldiers. Official Army MWR
Community Programs and Recreational Benefits
- Child Care/Youth Programs
A comprehensive child and youth care and recreational program is provided at installations worldwide. Professional, accredited staff provide state of the art support for all children, including; child care, child development, recreational services, and school liaison support for the mobile military families. Contact any Child Development Center or Youth Center for more information on the variety of programs and services to support military families worldwide. The Child Care guiding principles are Accessibility, Affordability, Quality, and Eligibility.
Shopping – Commissary and Exchange Privileges
The Defense Commissary Agency operates a worldwide chain of commissaries that provide goods to military personnel, retirees and their families in a safe and secure shopping environment. These commissaries serve as grocery stores for the military and sell their merchandise at cost plus a 5 percent surcharge, which covers the costs of building and existing other stores. Shoppers save an average of more than 30 percent on their purchases compared to commercial prices, savings worth about $3,000 annually for a family of four. Members with proper military ID also benefit from events such as truck load or case sales. Commissaries are one of the core military family support elements, and are a valued part of military pay and benefits. They contribute to family readiness and enhance the quality of life for America’s military and their families.
For more information about the commissary benefit, go to http://www.commissaries.com.
- Base Exchange
Better known as the “BX”. The BX offers goods at a tremendous savings to their customers, the military members and their dependents. No tax is charged and they offer a lay away plan, which is difficult to match at civilian stores.
- Exchange Credit Card
The Exchange credit card is offered to military members who want to purchase goods or services at base facilities. Upon approval, military personnel use the Deferred Payment Plan (DPP) charge card to shop at such establishments as the BX or the Military Clothing Store.
The card is an excellent avenue to establish credit and a convenient way to make purchases at Army & Air Force Base Exchanges worldwide for a low, competitive interest rate.