Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Military Income

Includible and Excludible Income

Excludible Income

Excludible income does not have to be reported as income on the tax return. The exclusion applies whether the item is:

  • Furnished in-kind (given in goods, commodities, or services rather than money) or
  • A reimbursement or an allowance

For example, the Basic Allowance for Housing (BAH) can be excluded from gross income as a qualified military benefit. Excludible income will not be included in the amount in box 1 on Form W-2.

The Homeowners Assistance Program (HAP) was created to compensate qualified military and civilian employee homeowners when base closures negatively impact the real estate market or when they are required to permanently relocate during the home mortgage crisis. These payments for qualified military base realignments and closures are excluded from income. For additional information go to

Refer to the Volunteer Resource Guide, Income tab, Armed Forces Gross Income, for detailed lists of excludible items.

More Information

If the Armed Forces member you are helping was provided a commuter highway vehicle (such as a van) by his or her employer during the tax year, refer the taxpayer to Publication 525, Taxable and Nontaxable Income.

Military commuter van, with U.S. Government license plate.
Publication 525, Taxable and Nontaxable Income

Publication 525, Taxable and Nontaxable Income