Military Tax Deductions That Lower Your Income
Both military-specific deductions below are adjustments to income. An adjustment to income is an amount you subtract to get your adjusted gross income (AGI), which is your total income minus these adjustments. You can claim them even if you take the standard deduction.
| Deduction | Who qualifies | Where it goes | Key limits |
|---|---|---|---|
| PCS moving expenses | Active-duty members moving under a military order for a PCS | Form 3903, then Schedule 1 | Reasonable, unreimbursed costs only; no meals; 20.5 cents (Jan 1–Jun 30) or 23.5 cents (Jul 1–Dec 31) per mile for tax year 2026 |
| Reservist travel | Reserve component members, including the National Guard, traveling more than 100 miles from home for reserve service | Form 2106, then Schedule 1 | Unreimbursed costs up to the federal rate; meals are 50% deductible |
The IRS Armed Forces’ Tax Guide adds a few limits on these deductions:
- A PCS move can include your first duty station or your move home within one year of separating.
- Moving and storage the government provides isn’t taxable income, and you can’t deduct it.
Other job costs get no break. The TCJA originally suspended these deductions for 2018–2025. The One Big Beautiful Bill Act, signed July 4, 2025, made that disallowance permanent, so the deduction did not return in 2026. Active-duty members get no adjustment for them either.
Tax-Free Military Pay
Some military pay is excluded from income, so it never gets taxed and needs no deduction.
- BAH and BAS aren’t taxable.
- Enlisted members and warrant officers (including commissioned warrant officers) can exclude all combat zone pay.
- Other commissioned officers can exclude combat zone pay up to a monthly cap of $11,391.90 for January–September 2026, and up to $11,616.90 (HFP) or $11,441.90 (IDP) starting October 2026.
- Serving in a combat zone for even part of one day counts for the whole month.
- Excluded combat pay appears on your W-2 in box 12 with code Q.
Tax-free combat pay still counts in a couple of places. It’s treated as compensation when you figure out how much you can put in an IRA. You can also choose to count it as earned income for the Earned Income Tax Credit (EITC). Figure the credit both ways, since the choice can raise or lower it.
Standard Deduction vs. Itemizing for Service Members
Next, you choose between the standard deduction and itemizing. The standard deduction is a flat amount based on your filing status. To itemize means to add up specific deductions, such as mortgage interest, and claim that total instead.
Under the One, Big, Beautiful Bill, the 2026 standard deduction amounts below generally apply to returns filed in 2027.
| Filing status | Standard deduction, tax year 2026 |
|---|---|
| Single or married filing separately | $16,100 |
| Married filing jointly or qualifying surviving spouse | $32,200 |
| Head of household | $24,150 |
These base amounts don’t include extra amounts for filers who are 65 or older or blind.
If you itemize, BAH still helps. You can deduct mortgage interest and real estate taxes you pay with BAH, even though the BAH itself isn’t taxed.
Combat Zone Tax Deadline Extensions
Serving in a combat zone also pushes back your tax deadlines. Your deadline moves to 180 days after your last day in the zone. You then add the number of days you had left to act when you entered.
- The extension covers filing, paying, refund claims and IRA contributions.
- The IRS charges no penalties or interest for late filing or payment during the extension.
- Similar rules apply to certain contingency operations and qualified hospitalization.
- Outside a combat zone, you may defer payment up to 180 days after release if service materially affects your ability to pay.
These extensions replace the regular tax filing deadline for the actions they cover.
Sources
- IRS, Publication 3 (2025), Armed Forces’ Tax Guide
- IRS, IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill
- Military Compensation and Financial Readiness, Housing and Food Allowances
- IRS, Standard Mileage Rates
- Cornell Law School, Combat Zone Compensation
