Combat Zone
A member assigned to or deployed to a combat zone receives "combat pay" (officially called "immiment danger pay") at the rate of $225.00 per month. Congress and/or the President can designated combat zones as "Tax Exempt" areas. In addition to Immiment Danger Pay (Combat Pay), and the tax exclusion, some areas qualify for a special monthly allowance called "Hardship Duty Pay." If you spend a single qualifying day in the combat zone, your pay for the entire month is excluded from taxable income, and you receive $225 in combat pay for that month. Finally, members in a combat zone are authorized to to deposit up to $10,000 (per year) of their pay and allowances into a special savings account, that pays a guaranteed 10 percent interest per year. This program was established during the Vietnam era, and then phased out at the end of the Vietnam War. However, it was revived in 1991 during the Gulf War, and the program still exists today. Here are the current designated combat zones by 2009:
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