Combat Pay Overview

What Is Combat Pay?

Combat pay refers to the additional compensation and tax benefits military service members receive when deployed to designated combat zones or hostile fire areas. While commonly called “combat pay,” this compensation actually consists of several distinct entitlements: Hostile Fire Pay (HFP), Imminent Danger Pay (IDP), Hardship Duty Pay (HDP), and significant tax exclusions that can add thousands of dollars to your take-home pay during deployment.

Types of Combat-Related Pay

Hostile Fire Pay (HFP) / Imminent Danger Pay (IDP) – $250/month

Service members receive $250 per month when they meet any of these criteria:

• Subject to hostile fire or explosion of hostile mines
• On duty in an area designated by the Secretary of Defense as a hostile fire or imminent danger area
• Killed, injured, or wounded by hostile fire, explosion of a mine, or any other hostile action

HFP/IDP is paid for any month in which the service member was in a designated area for any portion of that month. Even one day in a combat zone qualifies you for the full monthly payment.

Hardship Duty Pay – Location (HDP-L) – Up to $150/month

HDP-L compensates for assignment to locations with especially difficult living conditions, even if not in active combat. Rates vary by location and are designated by the Under Secretary of Defense.

Combat Zone Tax Exclusion (CZTE)

This is often the most valuable combat-related benefit. When serving in a designated combat zone:

• Enlisted members: ALL military pay is tax-free (no limit)
• Officers: Tax exclusion up to the highest enlisted pay plus HFP/IDP
• Applies to: Base pay, bonuses, special pays, and reenlistment bonuses

The tax savings can be substantial. An E-6 earning $4,000/month who deploys to a combat zone for 6 months might save $3,000-$5,000 in federal taxes alone, plus additional state tax savings.

Current Combat Zone Designations

As of 2025, designated combat zones include:

• Arabian Peninsula Areas: Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, and the waters of the Persian Gulf, Red Sea, Gulf of Oman, Gulf of Aden, and Arabian Sea
• Afghanistan: Afghanistan and surrounding airspace
• Kosovo: Federal Republic of Yugoslavia (Serbia/Montenegro), Albania, Kosovo, Adriatic Sea, and Ionian Sea
• Sinai Peninsula: For personnel assigned to the Multinational Force and Observers

Additionally, Qualified Hazardous Duty Areas (QHDA) provide the same tax benefits as combat zones without combat zone designation.

How Combat Pay Is Calculated

Monthly Proration

Unlike some pays, HFP/IDP is not prorated. If you’re in the combat zone for any portion of a month, you receive the full $250 for that month. This means strategic deployment timing can maximize your benefits.

Example: 6-Month Deployment

An E-5 with 6 years of service deploying to Kuwait:

Family Separation Allowance (FSA)

In addition to combat pay, service members separated from dependents for more than 30 days receive Family Separation Allowance of $250 per month. FSA is also tax-free when earned in a combat zone.

Savings Deposit Program (SDP)

One of the best-kept secrets of combat deployment is the Savings Deposit Program, which allows deployed service members to deposit up to $10,000 and earn 10% annual interest, guaranteed by the U.S. government. Key features:

• Interest rate: 10% per year (compounded quarterly)
• Maximum deposit: $10,000
• Eligibility: Must be in a combat zone for 30+ consecutive days
• Interest continues for 90 days after leaving combat zone

This guaranteed 10% return, combined with tax-free status, makes SDP one of the best investment opportunities available to military members.

State Tax Benefits

Many states offer additional tax benefits for combat zone service:

• Some states fully exempt combat pay from state income tax
• Filing deadline extensions for deployed service members
• Penalty waivers for late payments due to deployment

Check your state’s military tax benefits, as this varies significantly by state.

How to Verify Combat Pay

To ensure you’re receiving all combat-related entitlements:

1. Check your LES for HFP/IDP entitlement ($250/month)
2. Verify Family Separation Allowance if separated from dependents
3. Confirm combat zone tax exclusion is being applied (no federal tax withholding)
4. Review for any Hardship Duty Pay Location entitlements
5. Contact your deployed finance office with questions

Common Combat Pay Mistakes to Avoid

• Filing taxes incorrectly: Ensure your combat zone income is properly excluded
• Missing SDP enrollment: Sign up for the Savings Deposit Program early in deployment
• Not updating W-4: Adjust withholding after returning from deployment
• Overlooking state benefits: Research your state’s military tax provisions

Resources

• IRS Combat Zone Information
• DoD Hostile Fire/Imminent Danger Pay
• DFAS Savings Deposit Program