United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2004-05-07 monographic deposited born digital 32 p. GA 1.13:GAO-04-721R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-04-721R P0b002ee18039f2e2 f:d04721r DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-04-721R machine generated eng fdlp REPORT GAOREPORTS-GAO-04-721R GAO-04-721R Income taxes Military compensation Tax credit Active duty expense allowances Military personnel Fringe benefits Tax administration Earned Income Tax Credit Additional Child Tax Credit Correspondence A09965 The Department of Defense's (DOD) total military compensation package for active duty members consists of both cash and noncash benefits. Since the late 1990s, Congress and the DOD have increased military cash compensation by increasing basic pay and allowances for housing, among other things. Military members also receive tax breaks, which are a part of their cash compensation. Moreover, active duty personnel are offered substantial noncash benefits, such as retirement, health care, commissaries, and childcare. In some cases, these noncash benefits exceed those available to private-sector personnel. DOD relies heavily on noncash benefits because it views benefits as critical to morale, retention, and the quality of life for service members and their families. To better understand the military compensation system, Congress asked us to provide the Chairman and Ranking Minority Member of the Senate Committee on Finance with information on active duty military compensation and its tax treatment. In January 2004, we briefed Congressional staff on our preliminary observations. Because our work identified that the combat zone tax exclusion could impact some service members, Congress asked us to focus our work on military cash compensation and to do additional work to estimate the effect of the combat zone tax exclusion on service members' compensation. We provided Congress subsequent briefings that estimated the effect of the combat zone exclusion. As requested, we have updated and combined the briefings for this report to (1) summarize active duty cash compensation and describe how military compensation varies at different career points for officers and enlisted members; (2) explain how military pay is taxed and any special tax treatment of military compensation; (3) estimate the effects of interactions between the combat zone exclusion and certain tax credits on military members' compensation; and (4) describe the benefits DOD provides active duty members as well as specific programs available to members that encourage wealth building. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-04-721R/html/GAOREPORTS-GAO-04-721R.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-04-721R/pdf/GAOREPORTS-GAO-04-721R.pdf GAO-04-721R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-04-721R Correspondence GAO-04-721R; Military Personnel: Active Duty Compensation and Its Tax Treatment; Income taxes Military compensation Tax credit Active duty expense allowances Military personnel Fringe benefits Tax administration Earned Income Tax Credit Additional Child Tax Credit