Nontaxable Combat Pay Election

Members of the military can elect to have their nontaxable combat pay included as part of their overall income towards the earned income tax credit (EITC) for the purpose of increasing their credit.

Note that this increase is not automatic. In some circumstances, opting to add the combat pay may actually decrease the amount of the credit. It is advisable to calculate your taxes with and without the election first and decide which is most advantageous.