The following information is from the Defense Finance and Accounting Service handbook. The publication is intended to serve as an explanation of pay and entitlements for members of the U.S. military who are injured while serving in a combat zone and receiving medical treatment at military facilities outside of the zone. Wounded Warriors and their families are encouraged to contact their local military finance office for any updates to the information contained in the handbook. Your local finance office will have designated personnel assigned as the Wounded Warrior Pay Management Team (WWPMT).

Wounded Warrior Pay Management Team Mission

To provide accurate and real-time financial support to service members who are medically evacuated as a result of wounds, disease or injury incurred while serving in a combat zone. Additionally, to provide the critical human dimension of world-class customer service to Wounded Warriors. For the most up to date content, please visit their website at http://www.dfas.mil/dfas/militarymembers/woundedwarrior/woundedwarriorpay.html

Combat Zone Tax Exclusion (CZTE)

Combat Zone Tax Exclusion, or CZTE, allows military members to exclude all or a portion of pay and entitlements earned while serving in designated combat areas from tax liabilities. CZTE is authorized for each month during which the member is hospitalized in an inpatient status as a result of wounds, disease, or injury incurred while serving in a combat zone. Wounded Warriors may qualify for CZTE up to two years after conflict is officially declared ended if re-hospitalized due to the same injury.

Example 1:
SGT Todd leaves a combat zone on March 16, 2007, and begins outpatient care on March 17, 2007. SGT Todd continues outpatient care, and is never re-hospitalized as an inpatient due to the same injury. In this case, SGT Todd would receive CZTE through the end of the month of March 2007.

Example 2:
SGT Todd leaves a combat zone on March 16, 2007, and moves from inpatient care to outpatient care on April 2, 2007. After this move to outpatient care, SGT Todd is never re-hospitalized as an inpatient due to the same injury. In this case, CZTE would be received through April 2007 since SGT Todd was an inpatient during the month.

Example 3:
SGT Todd leaves a combat zone on March 16, 2007, and remains an inpatient until April 20, 2007. SGT Todd is never re-hospitalized as an inpatient due to the same injury. In this case, SGT Todd would receive CZTE through the month of April 2007 when outpatient care began.

Example 4:
SGT Todd leaves a combat zone on March 16, 2006, and remains an inpatient until May 20, 2006. SGT Todd is re-hospitalized as an inpatient due to the same injury in January and February 2007. SGT Todd would receive CZTE through the month of May 2006, and also for the entire months of January and February in 2007.

For questions or more information, see your local military finance office.