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State of California Franchise Tax Board

Tax Relief for Military Personnel Serving in Combat Zones

Military members and reservists serving in combat zones are provided California personal income tax relief, according to the Franchise Tax Board (FTB).

“Now that California's military service men and women are in harm's way, tax issues should be the least of their concerns,” said State Controller and FTB Chair Steve Westly.

California tax law generally conforms to federal tax benefits for combat zones and qualified hazardous duty areas. These include:

  • Exclusion of combat zone pay from taxable income.
  • Extensions of the filing due date for personal income tax returns until at least 180 days after leaving the combat zone or qualified hazardous duty area without incurring penalties or interest.
  • Suspension of delinquent tax collection of military personnel serving in the combat area for 180 days after leaving the combat zone or qualified hazardous duty area.

For enlisted members and warrant officers, all compensation for active service earned in a combat zone is tax-free. This includes regular basic pay. Special pay, such as reenlistment bonuses, is also tax-free if the service member reenlists in a combat zone. For commissioned officers, the monthly tax exclusion is capped at the highest enlisted pay, plus any hostile or imminent danger pay received. For 2003, this amount is $5,882.70 per month.

Military taxpayers filing on extension should alert the FTB when they do file by writing in RED on top of their tax return or payment: “Combat Zone: Operation Iraqi Freedom” (or the name of the specific combat zone served in). Taxpayers also need to include the dates they entered and left the combat zone or qualified hazardous duty area.

For more information, refer to FTB Publication 1021, California Tax Information for Military Personnel, FTB Publication 1032, Tax Information for Military Personnel, and IRS Publication 3, Armed Forces' Tax Guide.

To reach the FTB, access their Website at or call (800) 852-5711 from 7 a.m. to 8 p.m. Monday through Friday throughout the year and from 8 a.m. to 5 p.m. on Saturdays from January through June.

Chat with an FTB Representative