COMBAT ZONE TAX BREAK ANNOUNCED
December 14, 2001

Servicemembers in Afghanistan will receive significant tax breaks as a result of an executive order signed today by the president.

The order is effective Sep. 19, the day troops first started deploying for Operation Enduring Freedom. The combat zone tax exclusion applies to service in Afghanistan and the airspace above it. Servicemembers directly supporting operations in Afghanistan from other locations are also eligible if they are receiving imminent danger pay or hostile fire pay.

As a result of the order, enlisted servicemembers and warrant officers will pay no federal income tax on all basic pay and special pay. Officers will pay tax only on that portion of their pay that exceeds the highest enlisted pay plus the $150 imminent danger pay, a figure currently set at $5,043.

Eligible servicemembers also receive an automatic extension to file their taxes.

Since the order is retroactive to Sep. 19, eligible servicemembers can expect a refund of taxes already paid and future withholding to stop.

The executive order is on the Web at http://www.whitehouse.gov/news/releases/2001/12/20011214-8.html