Military Taxes 2026: What Is Taxed, What Is Not, and Where People Overpay
Base pay is taxed, BAH and BAS are not, and combat zone pay has its own rule. A plain breakdown of which lines on your LES the IRS counts in 2026, plus the state residency rule that costs military families the most money.
Military pay is not one thing for tax purposes. It is a stack of lines, some of which the IRS counts as income and some of which it does not, and the split is not obvious from looking at your LES. People routinely assume their whole check is taxable, which makes military pay look worse than it is, or assume allowances make the whole thing tax free, which it does not.
Here's the actual split, and the two rules where military families lose the most money by not knowing them.
The taxable side
Base pay is taxable. Federal income tax, Social Security, and Medicare all come out of it. This is the line on the 2026 pay table that moves with rank and years of service.
Also taxable: most special and incentive pays outside a combat zone. Flight pay, sea pay, hazardous duty pay, dive pay, and reenlistment bonuses are income. A bonus paid in a month you were in a combat zone is a different story, which is the next section.
The untaxed side
BAH and BAS are excluded from federal gross income. Not deducted, not credited - excluded. They never enter the calculation. In 2026 that's $476.95 a month in BAS for an enlisted member and anywhere from $1,185 to $5,127 in BAH for an E-5 with dependents, depending on where you are stationed. You can check yours in the BAH calculator.
Also excluded: the overseas housing allowance, moving and travel allowances, the uniform allowance, family separation housing, and most death gratuity and survivor payments.
This exclusion is the reason a military compensation figure and a civilian salary are not comparable numbers. A member drawing $4,000 a month in untaxed allowances needs a civilian gross salary well above $48,000 a year just to match that portion, before base pay even enters it.
Combat zone pay: the rule with a ceiling for officers
Serve even one day of a month in a designated combat zone and that whole month's pay gets the combat zone tax exclusion.
For enlisted members and warrant officers, all of it is excluded. Base pay, reenlistment bonuses paid that month, and special pays - the entire amount for the qualifying month.
For commissioned officers the exclusion is capped. The ceiling is the highest enlisted rate of basic pay plus imminent danger pay, which pays $225 a month in 2026. Pay above that ceiling stays taxable. This is why a senior officer and a junior enlisted member can serve the same deployment and see very different tax outcomes.
The combat pay calculator covers the special pays that go with a deployment and which of them stack.
Where military families actually overpay
State residency. Under the Servicemembers Civil Relief Act, you keep your state of legal residence when you PCS - you do not become a resident of the new state just by being stationed there. The Military Spouses Residency Relief Act extends the same protection to a spouse, and since 2023 a spouse may elect the member's state of residence even if they never lived there.
This matters because some states tax military pay in full, some exempt it entirely, and a handful have no income tax at all. Families who let their residency drift to whichever state they most recently PCS'd to can pay several thousand dollars a year they were never obligated to pay. Families who deliberately hold a no-tax residency and file correctly can pay nothing at the state level for an entire career.
The Roth TSP window during deployment. Contributions made from combat zone pay go in untaxed, and in a Roth TSP they come out untaxed as well. That is the closest thing to a free lunch in the tax code and it is only available while deployed. The TSP planner shows what a contribution in that window compounds to.
Filing extensions you are entitled to
Serving in a combat zone extends your filing and payment deadline by the length of your deployment plus 180 days, and interest and penalties do not accrue during that period. Members stationed outside the United States get an automatic two-month extension. Neither requires an application; both require you to note the qualifying service when you do file.
What this site does and does not do
MilitaryCalc computes pay and allowances, not tax returns. The paycheck calculator shows what lands in your account each month with the taxable and untaxed lines separated, the child tax credit calculator covers a credit military families often qualify for, and the capital gains calculator handles the other side of a PCS - selling a house.
For the return itself, MilTax through Military OneSource is free for service members and handles combat zone and multi-state situations that consumer software often gets wrong.
Bottom line
Base pay is taxed, allowances are not, combat zone months are excluded with a ceiling that only binds officers, and the single biggest avoidable cost is a state residency nobody chose on purpose. Check what your own stack looks like in the full paycheck calculator before you take anyone's word for what military pay is worth.