Military Personnel ::
Special Pays and Tax Treatment for Deployed Active Duty Military Personnel Enhanced
Relative to their peers who deployed in 1999 when the bankruptcy data for military personnel were gathered, more recently deployed active duty military personnel may be eligible to receive higher special pays.[Footnote 17] Since April 2003, Congress has temporarily increased the family separation allowance[Footnote 18] by 150 percent and imminent danger pay by 50 percent (see table 3). The April 2003 increases in these special pays would result in deployed active duty personnel's having relatively higher cash incomes today than would their peers who were deployed during the 12 months prior to the 1999 active duty survey.
Table 3: Changes in Two Special Pays for Deployed Active Duty Military Personnel--Before and After April 2003
|Special pay||Monthly pay before and after April 2003|
|Family separation allowance||$100||$250||150%|
|Imminent danger pay||$150||$225||50%|
Some or all of the income that active duty military personnel earn while serving in combat zones is also tax-free.[Footnote 19] The military pay, up to prescribed amounts, received while in these combat zones is excluded from gross income and is not subject to federal income tax.
Other special pays may be tax-free as the result of service in a combat zone. For example, service members who reenlist while serving in a combat zone are typically eligible to receive any applicable selective reenlistment bonus tax-free. For fiscal years 1999 through 2003, DOD's budget for that program grew from $418 million to an estimated $734 million, a 76 percent increase.[Footnote 20]
 Public Law 108-11, section 1316 (Apr. 16, 2003) and Public Law 108-136, sections 606, 619 (Nov. 24, 2003).
 Military families may incur additional expenses such as an increased need for childcare when active duty military members are separated from their families during deployments.
 Department of the Treasury, Internal Revenue Service, Armed Forces' Tax Guide: For Use in Preparing 2003 Returns, Publication 3, Cat. No. 46072M. This publication noted that all military pay for the month is excluded from income when an enlisted service member, warrant officer, or commissioned warrant officer served in a combat zone during any part of a month or while hospitalized as a result of service in the combat zone. The amount of the exclusion for a commissioned officer (other than a commissioned warrant officer) is limited to the highest rate of enlisted pay, plus imminent danger/hostile fire pay, for each month during any part of which an officer served in a combat zone or while hospitalized as a result of service there.
 See U.S. General Accounting Office, Military Personnel: DOD Needs More Effective Controls to Better Assess the Progress of the Selective Reenlistment Bonus Program, GAO-04-86 (Washington, D.C.: Nov. 13, 2003).